UC-NRLF 


$B    36    562 


THE   EXPRESS   COMPANIES 
OF  THE  UNITED  STATES 


A  Study  of  a  Public  Utility 


By 

BERT  BENEDICT 
n 


Price  10  Cents 


Published  by 

THE  INTERCOLLEGIATE  SOCIALIST  SOCIETY 

70  Fifth  Avenue,  New  York  City 


1919 


FOREWORD 

The  Intercollegiate  Socialist  Society  takes  pleasure  in  pre- 
senting to  the  public  this  careful  monograph  of  Mr.  Bertram 
Benedict  on  the  important  subject  of  ''The  Express  Companies 
of  the  United  States."  The  pamphlet  is  particularly  timely  in 
these  days  when  the  nation  is  endeavoring  to  formulate  its 
policy  regarding  the  future  control  of  the  express  business. 

It  is,  moreover,  the  first  concise  and  scholarly  analysis  of 
the  express  service  in  America  that  has  appeared  in  recent 
years  and  is  a  distinct  contribution  to  the  literature  on  the 
subject.  The  author  herein  presents  a  vivid,  bird's-eye  view  of 
the  development  of  the  express  companies  from  the  days  of  the 
stage-driver  up  to  the  present  time.  He  portrays  the  rapid  con- 
solidation of  express  systems,  their  integration  with  the  great 
railroads,  their  remarkable  enlargement  of  activities,  the  grow- 
ing competition  of  the  parcel  post  with  the  private  express 
systems  and  the  increasing  governmental  regulation  over  this 
utility. 

This  survey  is  followed  by  an  analysis  of  the  present  status 
of  the  express  companies,  and  a  discussion  of  express  profits. 
The  relative  service  rendered  by  express  and  parcel-post  is  then 
dealt  with,  and  the  reader  is  treated  to  an  illuminating  discus- 
sion of  the  probable  savings  accruing  from  government  owner- 
ship and  management  of  the  express  industry,  particularly  as  a 
result  of  consolidation  of  equipment,  agencies,  offices,  etc. 

In  conclusion,  Mr.  Benedict  deals  with  various  methods 
whereby  the  government  may  take  over  the  express  companies, 
tells  of  the  present  status  of  the  companies  as  a  result  of  the 
war,  and  gives  us  a  glimpse  into  future  developments.  The 
author  reaches  the  conclusion  that  the  express  service  should 
be  a  public  agency  and  that  it  should  be  closely  connected  with 
the  post  office  department  rather  than  with  the  railroad  admin- 
istration. The  pamphlet  as  well  explains  the  manner  in  which 
European  countries  have  handled  this  problem  and  presents  a 
complete  bibliography  on  the  general  topic.  The  author 
throughout  gives  a  wealth  of  accurate  information  concerning 
the  express  system  in  all  of  its  manifold  relationships. 

The  pamphlet  is  one  of  a  series  planned  by  the  Inter- 
collegiate Socialist  Society  on  various  phases  of  public  owner- 
ship and  democratic  management. 

Harry  W.  Laidler. 


INTRODUCTION^ 
THE  CHARACTER  OF  EXPRESS  SERVICE 

The  express  companies  of  the  United  States  are  unique 
organisms,  and  have  no  counterparts  in  any  country  outside  of 
North  America.  In  Europe,  their  services  are  performed  by 
the  parcel-posts  or  by  the  railroads  themselves,  often  in  con- 
junction with  collecting  and  delivering  companies.  I 

The  express  company  in  the  United  States  collects  from  the 
shipper  the  matter  to  be  sent  by  express  and  delivers  it  to  the 
consignee.  The  charge  for  expressage  may  be  either  paid  by 
shipper  or  collected  from  the  consignee.  The  transportation 
between  different  points  is  generally  furnished  by  the  railroads, 
although  steamship  and  stage  lines  are  also  used  to  a  slight 
extent ;  and  the  charge  for  this  transportation,  as  well  as  the 
charges  for  collection  and  delivery,  are  included  within  the  one 
fee  levied  by  the  express  company.  This  one  fee  also  auto- 
matically includes  insurance  up  to  fifty  dollars,  there  being 
additional  fees  for  additional  insurance,  to  the  amount  of  which 
there  is  practically  no  limit.  The  goods  shipped  are  sent  in 
express  cars  attached  to  passenger  trains  or  on  special  express 
trains  maintaining  the  speed  of  passenger  trains.  Because  of 
the  speedy  transportation  thus  afforded,  merchandise  large 
enough  to  be  sent  as  freight,  such  as  machinery  and  live  stock, 
is  often  forwarded  by  express ;  but  by  far  the  greater  part  of 
express  traffic  in  normal  times  is  composed  of  articles  weigh- 
ing less  than  one  hundred  pounds.  The  larger  companies  con- 
duct their  activities  in  foreign  lands  as  well  as  in  the  United 
States ;  and  in  addition  perform  a  number  of  subsidiary  activ- 
ities not  connected  directly  with  the  transportation  of  mer- 
chandise. 


The  author  wishes  to  acknowledge  his  indebtedness  to  the  studies 
of  Mr.  Davied  J.  Lewis,  the  one  man  in  official  public  life  in  the 
United  States  during  the  last  decade  adequately  to  realize  the  need 
for  investigation  and  agitation  in  the  field  of  a  Government  express 
service.  ^  ^      ,-^  , .  q  B.  B. 

January  25,  1919.  O  U  1  C5  i  O 


ORIGIN  AND  DEVELOPMENT 

The  development  of  the  express  business  in  the  United  States 
serves  perhaps  as  admirably  as  the  development  of  any  other 
single  public  utility  to  hold  up  the  mirror  to  the  economic 
ideology  which  prevailed  among  the  American  people  up  to 
August  1,  1914. 

The  origin  of  the  express  business  in  this  country  is  usually 
assigned  to  1839,  but  the  Davenport  and  Mason  Company 
claims  to  trace  its  beginnings  back  to  1836.  In  July  of  that 
year,  a  railroad  was  opened  between  Boston  and  Taunton,  Mas- 
sachusetts, a  distance  of  36  miles;  and  with  its  opening 
Charles  Davenport  and  N.  S.  Mason  delivered  valuables  and 
small  packages  to  customers  at  those  two  towns.  Even  be- 
fore this  time,  however,  the  picturesque  and  half -legendary 
stage-driver  had  often  called  for,  transported  and  delivered 
articles  entrusted  to  him  for  persons  living  along  or  near  his 
route.  Similar  service  had  been  frequently  rendered  also  by 
steamboat  captains  and  even  by  the  conductors  on  the  first 
railroads,  often,  if  not  usually,  as  an  unremunerated  personal 
favor.  A.  L.  Stimson,  one  of  the  early  expressmen  and  the 
author  of  the  most  comprehensive  history  of  the  express  busi- 
ness in  the  United  States,  states  that  the  need  for  some  form 
of  transportation  by  express  was  so  intense  before  1840  that 
a  person  could  hardly  make  a  trip  between  two  cities  without 
being  deluged  with  requests  to  deliver  parcels,  and  that  these 
requests  would  come  not  only  from  friends  and  acquaintances, 
but  even  from  total  strangers. 

THE  VENTURES  OF  HARNDEN,  ADAMS,  WELLS 
AND  FARGO 

The  first  reliable  and  extensive  express  service,  however, 
does  date  from  1839.  In  that  year,  William  F.  Harnden  grasped 
the  need  for,  and  chance  of  profit  in,  the  delivery  of  valuable 
parcels  between  Boston  and  New  York  and  to  that  end  made 
a  contract  for  his  personal  transportation  on  the  Boston  and 
Providence  Railroad — the  first  express  contract  in  the  United 
States.  Harnden  made  four  trips  weekly,  by  rail  to  Providence 
and  thence  to  New-  York  by  boat ;  and  carried  the  expressed 
articles  in  a  hand  satchel.  But  within  several  months  the 
business  outgrew  that  humble  forerunner  of  the  modern  ex- 
press car,  and  he  was  compelled  to  hire  additional  express  mes- 
sengers, to  set  up  offices,  and  to  arrange  for  special  space 
on  trains. 


So  successful  was  Harnden's  venture  and  so  serviceable  that 
he  soon  found  himself  confronted  by  many  imitators  and 
competitors.  In  1840,  Alvin  Adams  entered  the  New  Eng- 
land-New York  field,  thus  becoming  the  founder  of  the  present 
Adams  Express  Company ;  and  later  in  the  same  year  Hamden 
extended  his  business  to  Philadelphia.  In  the  following  year, 
Henry  Wells  and  a  partner  established  an  express  service  be- 
tween Albany  and  Buffalo.  By  1845  express  companies  had 
sprung  up  on  every  hand.  In  the  latter  year  Wells  and  Wil- 
liam G.  Fargo  developed  a  company  to  cover  territory,  much 
of  it  railroadless,  west  of  Buffalo;  and  very  soon  this  service 
reached  Chicago.  Early  in  the  fifties  Wells  and  Fargo  were 
delivering  in  California  by  the  stage  coach  and  pony  express 
of  song  and  story  and  motion  picture,  although  it  was  not  until 
1869  that  the  first  transcontinental  railroad  was  completed. 
(The  pre-occupation  of  the  present  Wells-Fargo  Express  Com- 
pany with  the  western  field  is  thus  not  fortuitous.)  And  by 
the  early  fifties  also  Adams  and  Company  was  beginning  to 
tap  the  South. 

EXPRESS  COMBINATIONS 

In  1850,  Wells  and  Company,  Livingston  and  Company,  and 
Butterfield,  Wasson  and  Company  so  far  violated  the  con- 
temporaneously sancro-sanct  belief  in  the  greater  efficiency  of 
the  competitive  system  and  the  contemporaneously  pseudo-relig- 
ious authority  of  the  whole  principle  of  competition  as  to  com- 
bine into  one  large  corporation,  the  American  Express  Com- 
pany. Later,  Wells,  Fargo  and  Company  organized  as  a  joint 
stock  company  with  a  capital  of  $300,000.  The  year  1854  saw 
the  consolidation  of  Adams  and  Company,  Harnden  and  Com- 
pany, Thompson  and  Company,  and  Kingsley  and  Company 
into  the  Adams  Express  Company,  and  in  the  same  year  the 
United  States  Express  Company  was  organized.  The  origin 
of  the  Southern  Express  Company  dates  from  1886 — it  is 
controlled  by  and  is  recognized  as  a  part  of  the  Adams  Express 
Company.  These  four  express  companies  continued  through 
the  nineteenth  century  and  into  the  twentieth  as  the  four  great 
branches  of  the  express  service  system  of  the  United  States. 
It  is  true  that  there  existed  by  their  side  a  number  of  other 
companies,  but  the  latter  were  subsidiary,  local  and  compara- 
tively unimportant.  The  fields  of  activities  of  these  four  great 
national  systems  were  as  follows:  Adams-Southern — the 
East,  middle  West,  and  several  western  routes,  and  the  South ; 
American — the  East,  middle  West  and  trans-Mississippi; 
United  States — the  East  outside  of  New  England  and  the  mid- 
dle West,  with  several  western  routes;  and  Wells-Fargo — ^the 


far  West  and  the  Southwest,  with  several  eastern  routes.  But 
there  have  long  been  complete  understanding  and  gentlemen's 
agreements  among  the  separate  companies;  and  for  practical 
purposes  they  formed,  not  four  units  of  competition  for  the 
express  business  of  the  countr}%  but  four  branches  of  one 
organization.  Several  Canadian  companies  also  do  business 
in  the  United  States. 

LACK  OF  REGULATION 

During  the  sixty  years  from  the  inception  of  these  private 
express  companies  in  the  United  States  to  the  dawn  of  the 
twentieth  century,  the  rendering  of  this  express  service,  of  vital 
significance  to  the  economic  needs  of  the  United  States  and 
of  vital  potential  significance  to  the  social  needs  of  the  people 
of  the  United  States,  was  relegated  without  whimper  to  un- 
checked private  agencies.  Although  the  last  thirty  years  of 
the  nineteenth  century  saw  the  development  of  the  United 
States  into  a  complex  and  extensively  specialized  industrial 
mechanism — with  a  growing  dependence  of  each  geographical 
division  of  the  country  upon  every  other  geographical  division 
and  of  each  economic  unit  upon  every  other  economic  unit — 
the  countr}-  seems  never  to  have  suspected  that  it  might  well 
claim  authority  over  so  important  a  link  in  its  industrial  integra- 
tion as  the  transportation  and  delivery  of  all  merchandise  too 
small  or  too  valuable  to  be  transferred  and  delivered  as  freight. 
There  sprang  into  being  during  this  period  only  some  futile 
and  spasmodic  attempts  at  state  regulation.  By  1871,  Germany 
had  developed  its  remarkable  Government  express  service, 
which  later  was  classified  into  passenger  and  fast  freight 
divisions,  with  corresponding  variation  in  costs.  In  Great 
Britain,  agitation  for  developing  the  express  business  as  a 
part  of  the  postal  system  had  resulted  in  the  establishment  of 
a  Government  parcel-post  as  early  as  1883.  By  1892,  the  French 
Government  was  conducting  an  express  business,  selling  the 
transportation  of  parcels  both  large  and  small  to  the  French 
people  without  yielding  profit  to  any  owners  of  stocks  and 
bonds,  but  imposing  charges  just  high  enough  to  meet  the 
cost  of  the  system ;  and  developed,  like  our  own  rural  free 
delivery,  with  an  eye  primarily  to  the  service  of  the  people, 
not  to  the  profit-and-loss  balance-sheet.  But  who  were  these 
countries  that  the  United  States  could  learn  anything  from 
them?  The  United  States  was  the  land  of  opportunity,  and 
if  gentlemen  of  affairs  had  been  skilful  enough  to  corral  under 
their  control  the  express  business  of  the  land,  we  most  em- 
phatically refused  to  thwart  their  opportunity  for  making  the 
most  of  their  foresight.    We  suggested  jail  for  the  agitator  who 


insisted  that  the  country  owed  the  poor  man  a  living,  but  the 
keystone  of  our  economic  creed  was  a  faith  that  we  owed  the 
rich  man  a  living.  We  weren't  interested  in  what  was  service- 
able as  such  to  the  people  as  a  whole — we  believed  in  the  divine 
right  of  private  enterprise  of  the  economically  capable.  Were 
the  express  companies  enforcing  exorbitant  rates?  Private 
enterprise.  Did  they  discriminate  against  certain  shippers? 
Private  enterprise.  Did  express  profits  represent  a  small 
amount  of  traffic  at  a  high  profit  instead  of  a  large  amount  of 
traffic  at  a  low  profit  ?  The  freedom  of  private  enterprise.  Was 
the  cost  of  expressing  a  package  unduly  high  because  of  the 
costliness  of  frequently  transferring  it  into  the  hands  of  five 
separate  companies?  Private  enterprise.  Could  the  Govern- 
ment do  the  business  more  satisfactorily,  more  cheaply  and 
more  extensively,  and  thus  reduce  the  cost  of  many  commodi- 
ties to  their  consumers  ?  The  holiness  of  and  the  necessity  for 
the  untramelled  right  of  private  enterprise. 

Accordingly,  it  was  not  until  1890  that  even  any  accurate  and 
reliable  figures  of  the  quantity  and  quality  of  the  express 
service  of  the  country  were  available  for  purposes  of  mere 
study  and  investigation.  Within  the  census  of  that  year,  the 
express  companies  happened  to  be  included — a  survey  being 
made  of  their  operations  for  the  fiscal  year  ending  June  30, 
1890;  and  thus  for  the  first  time  and  after  fifty  years  the 
American  people  were  able  to  get  some  information  on  the 
operations  of  the  private  agencies  to  whom  the  express  service 
of  the  land  had  been  entrusted.  It  is  true  that  the  act  of  Con- 
gress authorizing  the  census  of  1880  had  contained  a  provision 
for  the  collection  of  statistics  of  the  express  companies,  and 
that  a  schedule  of  inquiry  directed  toward  that  end  had  been 
formulated  and  distributed*  Only  two  of  the  eighteen  com- 
panies in  existence,  however,  replied  to  it.  The  others  main- 
tained that  the  census  law  had  no  authority  over  their  vested 
interests,  and  declined  to  make  a  report.  The  Census  Office 
in  1880  actually  reacted  to  this  attitude  by  courteously  aban- 
doning its  legally-authorized  investigation,  and  contenting  itself 
with  publishing  merely  some  information  on  the  contracts 
between  the  express  companies  and  the  railroads.  And,  al- 
though the  1890  Census  went  so  far  as  to  publish  the  expendi- 
tures of  the  express  companies,  it  very  naively  declined  to 
report  upon  their  receipts. 

AUXILIARY  FUNCTIONS  OF  EXPRESS  COMPANIES 

By  1890,  moreover,  the  express  companies  had  developed  and 
at  the  present  time  are  performing  certain  functions  which  are 
secondary  to  or  even  independent  of  the  express  business 


proper.  These  functions  for  the  greater  part  parallel  at  the 
present  time  similar  functions  performed  by  the  national  gov- 
ernment or  by  other  agencies.  These  adjunct  and  independent 
functions  are: 

1 — The  issue  of  money  orders,  letters  of  credit,  travelers' 
checks,  etc.,  payable  through  express  company  agents  and  cor- 
respondents over  well-nigh  the  entire  civilized  world. 

2 — The  purchase  for  customers  of  goods  in  any  locality  in 
which  an  express  office  is  located. 

3 — The  sale  for  their  customers  of  goods  in  any  locality  in 
which  an  express  is  located. 

A — Miscellaneous  services,  such  as  filing  legal  documents, 
redeeming  pawned  articles,  selling  exchange,  entering  and  clear- 
ing articles  of  import  and  export  at  customs  houses,  paying 
bills,  and,  in  short,  attending  to  any  business  which  can  be 
readily  performed  by  an  agent  for  a  customer. 

THE  1890  CENSUS 

Remembering,  then,  these  secondary  as  well  as  the  primary 
aspects  of  the  express  business,  the  students  of  the  1890  Cen- 
sus on  Express  Companies  would  have  learned  the  following 
facts : 

Number  of  companies 18 

Total  mileage  operated  174,535 

Total  on  Railroads   160,122 

Total  on  Water  Lines 10,822 

Total  on  Stage  Lines 3,055 

Value  of  Equipment  and  Fixtures $5,074,045 

Expenditures $45,783,123 

Receipts Not  reported 

Number  of  employees 45,718 

Number  of  Money  Orders  Issued 4,598,567 

Number  of  packages  carried  by  Express 115,377,112 

Paid  to  Railroads,  Steamboats,  and  Stage  Lines  for 
transportation $19,561,182 

Of  the  total  mileage  operated,  as  shown  below,  92.7%  was 
operated  by  the  five  leading  companies  listed  above  and  the 
Pacific  Express  Company.  The  latter,  organized  in  1879,  was 
owned  and  directed  by  the  Gould  group  of  railroads  (the 
Union  Pacific,  Missouri  Pacific  and  Wabash  Lines)  ;  its  busi- 
ness was  taken  over  in  1911  by  the  Wells-Fargo  Company. 

Total  mileage  operated  174,535 

Adams  Express  Company 24,919  * 

American    Express    Company    43,126 

Pacific  Express  Company 21,332 

Southern  Express  Company 21,714 

United  States  Express  Company r 21,479 

Wells-Fargo  Express   Companp 29,098 

9 


These  six  companies  also  carried  92%  of  the  parcels  caf- 
ried  by  express,  as  follows : 

Total  number  of  packages 115,377,112 

Adams    Express    Company 26,456,382 

American    Express    Company 23,871,251 

Pacific    Express   Company 7,552,622 

Southern  Express  Company 7,552,622 

United  States  Express  Company •  17,039,844 

Wells-Fargo  Express  Company 22,658,384 

The  unquestioning  devotion  of  the  American  public  of  1890 
to  the  principles  of  private  enterprise  is  attested  by  the  fact 
that  there  was  no  further  census,  and  hence  no  further  reliable 
information  about  the  express  companies,  until  1907.  It  is 
true  that  the  express  companies  were  included  in  a  Census 
Report  on  Transportation  in  1894,  but  this  survey  could  hardly 
be  considered  comprehensive. 

THE  EXPRESS  COMPANIES  AND  THE  RAILROADS 

Until  the  twentieth  century,  then,  the  express  companies 
remained  unchallenged  and  even  uninvestigated  in  their  con- 
trol of  the  service  of  transporting  packages  and  parcels  weigh- 
ing more  than  four  pounds.  (Packages  and  parcels  up  to  four 
pounds  in  weight  could  be  sent  by  mail.)  In  ownership  and 
control  as  well  as  in  the  nature  of  their  activities,  they  were 
linked  with  the  great  railroad  systems ;  and  there  was  in  addi- 
tion an  extensive  amount  of  interownership  between  the  various 
express  companies.  When  the  1907  (the  second)  Census  report 
on  express  companies  was  published,  it  was  found  that  of  the 
$68,853,200  capitalization  of  the  seventeen  important  express 
companies,  $20,668,000,  or  30%,  was  in  the  hands  of  the  rail- 
roads as  such.  [The  express  companies  as  such  had  recipro- 
cated by  buying  and  holding  the  stock  of  railroad  companies 
to  the  amount  of  $22,218,950  and  railroad  bonds  to  the  amount 
of  $12,324,000.]  Moreover,  of  the  $68,853,200  capitalization 
of  the  express  companies,  $11,618,125,  or  17%,  was  held 
among  the  various  express  companies  as  such.  How  much  of 
the  remaining  53%  of  the  capitalization  of  the  express  com- 
panies was  held  by  individuals  interested  in  the  railroad  hold- 
ings and  control  cannot  be  told,  but  may  certainly  be  surmised. 

It  is  therefore  not  surprising  to  find  that  in  1909  of  the  seven 
4irectors  of  the  Adams  Express  Company,  four  were  directors 
of  railroad  companies;  of  the  nine  directors  of  the  American 
Express  Company,  three ;  of  the  seven  of  the  Pacific  Express 
Company,  six ;  of  the  seven  of  the  United  States  Express  Com- 
pany, two;  and  of  the  thirteen  of  the  Wells-Fargo  Company, 
ten.    In  1918,  more  than  half  of  the  directors  of  the  four  large 

10 


express  companies  were  also  directors  of  railroads.  The  ex- 
planation of  the  willingness  of  the  railroad  companies  not  to 
disturb  the  express  companies  in  their  exclusive  exploitation 
of  the  express  service  field  is  hence  not  difficult  to  find.  Even 
those  few  of  the  directors  who  were  not  directors  in  railway 
systems  were  nevertheless  also  of  that  group  of  controllers  of 
industry  which  was  responsible  for  the  sinister  connection 
between  American  politics  and  American  big  business  which 
for  so  many  years  had  prostituted  the  promise  of  American 
life.  Furthermore,  whatever  few  regulations  could  be  applied 
generally  to  corporations  as  such  had  little  effect  upon  the 
express  companies ;  for  the  Wells-Fargo  and  the  Southern 
were,  and  up  to  the  present  time  are,  the  only  large  companies 
which  have  the  corporation  structure.  The  other  three  main- 
tain their  early  status  as  limited  partnerships  of  a  fixed  num- 
ber of  shares  without  fixed  par  value,  although  the  Adams 
Express  Company,  on  December  15,  1913,  assigned  a  par 
value  of  $100  to  each  of  its  120,000  shares  outstanding,  giving 
it  a  capitalization  of  $12,000,000. 

Of  no  less  wisdom  than  cynicism  accordingly  was  the  re- 
mark of  a  prominent  American  statesman  when  propaganda 
for  the  establishment  of  a  parcel-post  had  finally  begun  to  rear 
its  defiant  head :  "There  are  four  reasons  why  the  parcel-post 
cannot  be  established  in  the  United  States,"  with  the  explana- 
tion, when  pressed  for  details:  "The  four  reasons  are:  (1) 
The  Adams  Express  Company;  (2)  the  Wells-Fargo  Express 
Company;  (3)  The  American  Express  Company;  and  (4) 
The  United  States  Express  Company." 

REGULATION 

By  the  twentieth  century,  however,  the  hypnotic  spell  of  the 
private  enterprise  creed  over  at  least  the  middle  and  lower 
economic  classes  was  beginning  to  weaken.  The  American 
public  was  developing  a  sullen  and  by  no  means  silent  antipathy 
— in  some  sections  seemingly  congenital — to  the  great  national 
corporations.  The  storm  had  burst  first  upon  the  railroads ; 
and  when  in  1906  the  Hepburn  Act  gave  the  Interstate  Com- 
merce Commission  definitely  increased  powers  over  the  rail- 
roads, with  commendable  logic  the  express  companies  were 
coupled  with  the  railroads  in  the  scope  of  the  law.  All 
express  tariffs  had  to  be  filed  with  the  Commission.  No 
change  could  be  made  in  a  tariff  except  after  thirty  days' 
notice.  A  uniform  system  of  accounts  could  be  and  soon  was 
ordered  by  the  Commission.  The  Commission  was  given  access 
to  all  the  books  and  records  of  the  companies.    And,  of  especial 

11 


significance,    upon   complaint    express    rates    could    be   fixed 
by  the  Commission,  subject  to  review  by  Federal  courts. 

The  Mann-Elkins  Act  of  1910  went  even  further.  Among 
its  other  provisions,  the  burden  of  proof  on  rates  was  shifted 
to  the  express  companies  and  the  Commission  was  given  power 
to  initiate,  of  its  own  volition,  express  rate  rulings  which  not 
much  later  became  subject  to  review  only  by  the  Supreme 
Court  of  the  United  States.  Power  over  the  classification  of 
express  traffic  was  also  specifically  given  to  the  Commission. 
The  Commission  immediately  utilized  its  new  powers  to  in- 
augurate a  searching  investigation  of  every  aspect  of  the 
express  business,  with  the  result  that  on  February  1,  1914,  there 
went  into  effect  a  reduction  in  rates  amounting  to  an  average 
decrease  of  about  16%,  together  with  a  new  system  for  cal- 
culating such  rates,  the  country  being  divided  for  that  purpose 
into  five  zones.  The  newly  prescribed  rates  were  stated  and 
arranged  after  a  fashion  simple  enough  to  be  readily  under- 
stood by  any  tyro.  All  direct  and  indirect  rebates  were  aboh 
ished.  Articles  of  food  were  to  go  at  three-fourths  the  new 
rates.  The  classification  of  merchandise  was  radically  sim- 
plified. (Already  in  1913,  a  further  act  of  Congress  had  made 
discrimination  against  shippers  a  criminal  offense  punishable 
by  fine  or  imprisonment.) 

PARCEL-POST 

But  the  hardest  blow  to  the  express  companies  had  been 
delivered  on  August  24,  1912.  On  that  day,  after  years  of  agi- 
tation, a  bill  providing  for  a  parcel-post  in  the  United  States 
became  the  law  of  the  land;  and  the  parcel-post  system  went 
into  effect  on  January  1,  1913.  Congressman  David  J.  Lewis 
conducted  a  staunch  campaign  to  have  a  postal  express  pro- 
vision included  in  the  new  law,  but  unsuccessfully;  and  the 
weight  limit  of  the  parcels  which  could  be  sent  through  the  post 
office  was  fixed  at  eleven  pounds.  Nevertheless,  the  United 
States  Express  Company  saw  the  handwriting  on  the  wall,  and 
in  that  year  decided  to  wind  up  its  business,  ceasing  operations 
on  June  30,  1914. 

The  detailed  history  of  the  development  of  the  parcel-post 
in  the  United  States,  closely  related  as  are  the  parcel-post  and 
express  problems,  is  not  pertinent  to  this  study.  It  is  sufficient 
to  point  out  that  more  and  more  the  parcel-post  has  been 
broadened  so  as  to  include  much  of  what  was  the  express  com- 
panies' field.  At  the  present  time,  the  weight  limit  is  70  lbs. 
for  a  distance  up  to  300  miles  and  50  lbs.  for  greater  distances. 
Packages  may  be  sent  collect  on  delivery  up  to  $100,  and 

12 


they  may  be  insured  up  to  $100  There  are  separate  fees  for 
those  two  latter  services  up  to  ten  cents,  which  amount  covers 
both  a  collection  on  delivery  of  $100  and  insurance  of  $100. 
A  receipt  is  given  for  the  uninsured  pre-paid  parcel  for  a  fee 
of  one  cent.  So  that  by  January  1,  1918,  the  busi,ness  of 
transporting  goods  too  small  or  too  valuable  to  be  transported 
as  freight  was  divided  between  two  agencies  in  competition 
with  each  other — one  of  thern  governmental,  one  of  them 
private. 


13 


THE  PRESENT  ACTIVITIES  OF  EXPRESS 
COMPANIES 

Before  considering  the  problem  thus  presented  to  the  mind 
— nor  would  it  be  inexact  to  add,  to  the  conscience  of  every 
keenly-scrutinizing  student  of  political  and  industrial  phe- 
nomena in  the  United  States — a  resume  of  the  practically  con- 
temporaneous activities  of  the  private  express  companies  w^ill 
be  helpful.  In  the  twelve  months  preceding  January  1,  1918, 
the  statistics  of  the  eight  express  companies  doing  interstate 
business  in  the  United  States — ^the  Adams,  American,  Cana- 
dian, Great  Northern,  Northern,  Southern,  Wells-Fargo  and 
Western — were  as  follows: 

Total  Mileage  307,400 

Railroad  257,408 

Electric  Line  8,802 

Steamboat 39,995 

Stage  Line  1,195 

Total  Mileage  307,400 

Adams  Express  Company 48,602 

American  Express  Company 73,289 

Southern  Express  Company  34,918 

Wells-Fargo  and  Company ' 115,521 

All  others  35,070 

Cost  of  Land.  Buildings  and  Equipment  on  January 

1,  1918 $44,160,773    " 

Land  and  Buildings 20,811,830 

Equipment  23,348,943 

Inventory  Value  of  Equipment  owned  on  January 

1,  1918 $13,735,058 

Total  Express  Charges .$222,860,373 

Other  Operating  Revenue 6,594,815 

Total $229,455,188 

Operating  and  Other  Expenses $229,639,493 

Deficit  from  Operating 184,305 

Other  Income  4.471,292 

Gross  Income 4,286,987 

Deductions  from  Gross  Income 1,538,481 

Net  Income  $2,748,406 

Dividends    2,508,044 

Profit  and   Loss   Balance $24,294,792 

Total    Investment,    Including    Real    Property    and 

Equipment  $123,484,515 

14 


Capital  Stock  $59,008,600 

Funded  Debt  Unmatured 20,736,500 

Money  Orders  Issued : 

Number 16.035,002 

Amount  $145,934,982 

C.  O.  D.  Checks  Issued: 

Number  8,612.106 

Amount  $143,832,226 

Limited  and  Unlimited  Checks  Issued: 

Number  236,071 

Amount  $108,798,279 

Telegraph  and  Cable  Transfers  : 

Number 88,146 

Amount  $136,809,746 

Travelers'  Checks  Issued : 

Number  1.608,037 

Amount   $34,923,816 

Letters  of  Credit  Issued  :^ 

Number 1,539 

Amount  $4,126,154 

Revenue    from    the    above    six    items    and    other 
sources,  other  than  Express  Charges $6,594,815 

Maintenance  Expenses  $6,527,766 

Traffic  Expenses 925,033 

Transportation  Expenses $98,583,724 

(Employees'  Wages)  (55,820,701) 

General  Expenses 7,684,534 

(Salaries  and  Personal  Expenses) (4,161,299) 

^Including  569  Postal  remittances  to  the  amount  of  $39,435, 
issued  by  the  Canadian  Express  Company. 

Note: — Of  the  above  figures  the  Adams,  American,  Southern 
and  Wells-Fargo  Companies  accounted  for  899^  of  the  mileage 
and  for  94%  of  the  total  operating  revenues. 

One  feature  of  the  above  figures  stands  out  pre-eminent. 
With  a  capital  stock  of  $59,000,000  and  a  funded  debt  of 
$21,000,000,  the  express  companies  performed  express  opera- 
tions bringing-  in  an  annual  revenue  of  $223,(XX),000.  (Of 
this  latter  sum,  one-half  went  to  the  railroad,  steamship  and 
stage  lines  for  transporting  the  packages  entrusted  to  their 
care  by  the  express  companies.)  On  January  1,  1918,  the  cost 
of  the  land  and  buildings  owned  by  the  express  companies 
was  slightly  more  than  $20.000,(XX)  and  of  the  equipment 
slightly  more  than  $23,000,000.  It  is  therefore  immediately 
evident  that  the  most  valuable  asset  of  the  express  companies 
is  to  be  found,  not  in  their  tangible  property,  but  in  their 
contracts  with  the  various  railroad  companies  giving  them  the 

15 


exclusive  right  to  have  their  packages  transported  by  the  rail- 
roads on  passenger  trains — in  a  sense,  their  charters. 

PROFITS  OF  EXPRESS  COMPANIES 

Previously  to  the  regulation  of  express  rates  by  the  Inter- 
state Commerce  Commission  and  to  the  beginning  of  the  par- 
cel-post in  this  country,  the  profits  of  the  express  companies 
were  undeniably  swollen.  By  just  how  much  they  were  unrea- 
sonably large,  it  is  practically  impossible  to  determine;  al- 
though the  Interstate  Commerce  Commission  did  on  several 
occasions  officially  assert  unduly  large  profits  in  the  case  of 
the  Wells-Fargo  Company. 

As  described  above,  three  of  the  five  leading  companies 
had  issued  no  stock  at  a  fixed  par  value,  but  had  distributed  a 
certain  number  of  shares  of  ownership.  They  had  started  in 
business  with  a  limited  equipment  (Franklin  K.  Lane  declares 
that  it  had  not  exceeded  $1,000,000  in  value)  and  had  pur- 
chased new  equipment  mostly  from  current  profits.  Some 
companies  have  capitalized  their  profits.  Others  have  carried 
them  along  from  year  to  year  in  a  profit  and  loss  account. 
By  their  contracts  with  the  railroad  companies,  they  have 
become  practically  a  part  of  the  railroad  system,  and  hence 
whatever  equipment  and  property  they  themselves  possess 
have  served  up  to  the  present  time  as  little  basis  for  deter- 
mining their  just  profits.  For  instance,  as  the  decision  of 
the  Interstate  Commerce  Commission's  report  of  1912  pointed 
out,  some  one  company  may  invest  money  in  certain  equip- 
ment which  another  company  hires.  They  both  may  make 
the  same  percentage  of  profit  on  the  same  amount  of  busi- 
ness, but  in  the  first  class  the  profit  would  loom  small  in 
comparison  with  the  property  of  the  company,  whereas  in  the 
second  case,  it  would  loom  unnaturally  large.  In  other  words, 
a  charge  on  capital  in  the  first  case  would  be  classified  as  an 
item  of  operating  expense  in  the  second. 

And  yet,  despite  all  these  considerations,  the  fact  that  from 
1909  to  1912  the  net  profits  of  the  companies  were  from  17% 
to  65%  of  the  value  of  their  properties,  coupled  with  the 
common  sense  knowledge  that  in  those  years  there  was  no 
inward  or  outward  compulsion  upon  the  directors  of  the  com- 
panies to  charge  one  cent  less  than  the  traffic  would  bear, 
makes  it  certain  enough  for  practical  purposes  that  the  express 
companies'  profits  were  unethically  swollen. 

Whatever  the  profits  before  1913,  however,  they  have  sadly 
dwindled  since,  as  the  following  figures  of  the  Interstate  Com- 
merce Commission  will  indicate : 

16 


Fiscal 

Operating 

Operating 

Net  Operating 

Year 

Revenues 

Expenses 

Revenue 

1909 

$132,599,191 

$120,305,182 

$12,294,009  or   9% 

1910 

$146,116,316 

$131,608,035 

$14,508,281  or  10% 

1911 

$152,612,880 

$141,025,251 

$11,587,629  or   8% 

1912 

$160,121,933 

$151,831,956 

$8,289,977  or   5% 

1913 

$168,880,923 

$163,088,205 

$5,792,718  or   3% 

1914 

$158,891,327 

$157,128,012 

$1,763,255  or   1% 

1915 

$148,994,960 

$145,037,555 

$3,957,415  or   3% 

1916 

$179,206,649 

$167,063^10 

$12,143,439  or   6% 

Calendar 

Year 

1916 

$196,137,768 

$185,523,071 

$10,614,727  or   5% 

1917 

$229,455,188 

$227,256,116 

$2,199,072  or   1% 

1918 

$5,579,601  Deficit 

(First  five  months) 

Note  : — In  studying  the  above  figures,  it  must  be  remembered  that 
approximately  one-half  of  the  operating  revenues  are  paid  to  the 
railroads  for  transportation,  so  that  for  practical  purposes  the  ratio 
of  the  total  operating  revenue  to  the  net  operating  revenue  with 
respect  to  the  direct  business  of  the  express  companies — the  collec- 
tion of  packages  for  the  railroads  and  the  delivery  from  the  railroads — 
would  be  approximately  twice  the  percentages  in  the  above  table. 


17 


GOVERNMENT  POSTAL  EXPRESS  VS. 
PRIVATE  EXPRESS  COMPANIES 

At  certain  periods  of  each  year,  the  Post  Office  Department 
takes  a  count  of  the  packages  mailed  in  the  parcel-post,  the 
postage  collected  on  them,  and  their  total  weight.  These 
periods  of  count  are  the  first  two  weeks  in  April  and  the  first 
two  weeks  in  October.  By  multiplying  their  sum  by  13,  we 
can  thus  obtain  a  fairly  accurate  figure  for  the  total  number 
of  parcels  mailed  within  the  year  in  1917 — roughly  1,120,000,- 
000.  On  the  other  hand,  the  number  of  parcels  carried  in  that 
year  by  the  express  companies  may  be  put  at  280,000,000. 
(Note  1.) 

Accordingly  in  1917  the  number  of  parcels  expressed  in 
the  United  States  was  roughly  as  follows : 

By  Parcel-Post 1,120,000,000 

By  Express  Companies 280,000,000 

But  in  1912,  if  the  average  express  charge  was  the  same 
as  in  1909,  and  no  reason  is  known  why  it  should  not  have 
been,  the  number  of  parcels  carried  by  the  express  companies 
was  about  320,000,000.  In  that  same  year  the  number  of 
parcels  carried  by  the  post  office,  under  the  four-po.und  limit, 
was  240,000,000.  In  other  words,  the  efifect  of  the  entrance  of 
the  Government  into  what  had  been  a  field  of  private  enter- 
prise resulted  within  five  years  in  an  increase  of  more  than 
450%  in  the  extent  of  the  service  rendered  by  the  Govern- 
ment, whereas  the  express  company's  services  to  the  public  in 
that  time  actually  decreased  12^%,  although  the  extent  of 
the  total  services  rendered  by  the  two  combined  agencies 
increased  250%. 

Nor  can  the  increase  in  the  parcel-post  business  be  explained 
by  the  assertion  that  the  Government  performs  this  business 
at  a  great  loss.  The  balance  sheet  of  the  Post  Office  Depart- 
ment since  1912  has  been  as  follows: 

1912 $1,781,435  deficit 

1913 4,551,984  surplus 

1914 4,390,796  surplus 

1915 11,297,861  deficit 

1916 5,853,655  surplus 

1917 9,887,398  surplus 

Now,  it  is  obvious  that  the  financial  account  of  the  entire 

18 


Post  Office  Department  is  composed  of  too  many  divergent  ele- 
ments for  the  financial  account  of  the  parcel-post  alone  to  have 
any  conclusive  bearing  upon  it.  But  it  is  equally  obvious  that 
if  so  extensive  and  particularly  so  expensive  a  function  of 
the  Postal  System  as  the  parcel-post  had  been  conducted  at  a 
considerable  loss,  the  fact  would  be  reflected,  to  some  extent, 
at  leastj  in  a  growing  deficit  of  the  Department  as  the  parcels 
conveyed  grew  in  number  from  240,000,000  in  1912  to  1,120,- 
000,000  in  1917.  Nor  have  the  railroads  made  good  before 
the  courts  or  before  the  Interstate  Commerce  Commission 
their  contention  that  their  recompense  for  carrying  parcels  is 
unfairly  low. 

COMPARISON  WITH  OTHER  COUNTRIES 

Similar  findings  on  the  comparative  value  of  the  Govern- 
ffient  service  and  the  private  companies'  service  in  the  express 
fields  may  be  obtained  from  another  source.  Up  to  January  1, 
1913,  outside  of  parcels  weighing  less  than  four  pounds,  the 
private  express  companies  had  unchallenged  exploitation  of  the 
express  service  of  the  United  States.  How  did  the  extent  of 
our  service  in  1912  compare  with  the  extent  of  the  service  in 
other  lands  in  which  our  private  express  companies  found 
no  counterparts? 

Obviously,  there  is  no  absolute  basis  for  fruitful  compari- 
son. Greater  distances,  more  sparsely  settled  territory,  greater 
wealth,  greater  geographical  specialization  of  function  and 
hence  greater  need  for  integration  between  diflferent  sections, 
higher  standards  of  living,  more  diversified  demands — these  are 
some  of  the  features  of  the  problem  here  as  compared  with 
the  problem  abroad  which  make  an  absolute  comparison  of 
express  services  valueless.  But  practically  every  feature  of  the 
express  situation  would  aflfect  also  the  freight  traffic  of  the 
United  States  as  compared  with  the  freight  traffic  abroad.  In 
other  words,  the  express  traffic  of  the  United  States  before 
1913  should  have  had  the  same  ratio  to  the  freight  traffic  of 
the  United  States  as  the  express  traffic  of  other  lands  to  the 
freight  traffic  of  other  lands,  in  case  the  United  States  express 
companies  were  as  efficient  in  comparison  with  foreign  express 
agencies  as  the  railroads  of  the  United  States  in  comparison 
with  railroads. 

In  a  hearing  before  a  committee  of  Congress  in  1912,  Mr. 
David  J.  Lewis,  then  a  congressman  from  Maryland,  presented 
the  evidence,  which  he  had  obtained  from  the  original  reports 
of  the  railways  of  the  countries  concerned: 

19 


Pounds  Pounds  Ratio 

Freight  Express  Express 

Shipped  Shipped  Shipped  to 

Country       ;        Date         Per  Capita  Per  Capita  Freight 

Argentina    ......   1909             10,680  165.4  1  to    64 

Austria   1908             11,260  116.6  1  to    97 

Belgium   1909             16,320  199  1  to    82 

Germany    1909             15,980  140.4  1  to  113 

France    1908               7,480  140.6  1  to    53 

Hungary    1908               5,540  67.8  1  to    84 

United   States....  1909             16.300  99  1  to  165 

In  other  words,  the  express  facilities  of  the  United  States 
were  used  50%  less  than  in  the  country  above  showing-  the 
lowest  development  of  express  service  and  about  200%  less 
than  in  the  country  showing  the  highest  development  of  ex- 
press service.  When  it  is  remembered  that  express  is  much 
quicker  and  more  convenient  than  freight,  although  more  ex- 
pensive, and  that  the  industrial  processes  of  the  United  States 
have  long  been  and  still  are  characterized  by  a  keener  demand 
for  speed  and  convenience,  irrespective  of  cost,  than  the  in- 
dustrial processes  of  other  countries,  the  above  table  becomes 
eloquent  with  significance. 

With  respect  to  the  costs  of  the  express  service,  the  same 
basis  for  comparison  may  be  used. 

Ratio 

Average  Average         Freight 

Freight  Express          Charges 

Charge  Charge  to  Express 

Country                      Date        Per  Ton  Per  Ton         Charges 

Argentina    1909           $1.95  $6.51            1  to    3.2 

Austria   1908               .74  Z.77           1  to    5 

Belgium    1909               .53  4.92           1  to    9.3 

France    1908               .95  6.88           1  to    7.2 

Germany    1908               .76  3.80            1  to    5 

'    Hungary   1908               .93  3.68            1  to    3.9 

United   States 1909             1.90  31.20           1  to  16.4 

And  yet  the  statesmen  at  Washington  have  disposed  and 
doubtless  will  still  endeavor  to  dispose  of  the  proposal  to  have 
the  Government  own  and  manage  the  express  service  of  the 
land  by  speeches  on  texts  to  the  effect  that  the  spirit  of 
America  demands  individual  freedom;  that  that  is  the  best 
Government  which  governs  the.  least ;  that  incentive  to  pro- 
ductive endeavor  is  possible  only  in  private  establishments 
and  completely  disappears  in  the  public  service;  to  which 
will  now  doubtless  be  added  the  charge  that  such  a  proposal 
smacks  of  Socialism  and  that  every  red-blooded  American 
understands  that  anything  and  everything  Socialistic  is  un- 
deniably un-American! 

20 


The  implication  of  the  above  figures,  however,  is  undeniable 
for  the  man  who  trusts  thought  as  well  as  emotions.  The 
Postal  System  has  gone  into  the  express  field  and,  in  com- 
petition with  the  express  companies,  by  their  respective  show- 
ings, has  in  five  years  rendered  to  the  American  public  far  more 
valuable  service  than  that  rendered  by  the  express  companies. 
The  opponents  of  Government  ownership  and  management 
have  been  ruthlessly  confuted.  They  predicted  graft — there 
has  been  none.  They  prophesized  inefficiency — the  figures 
give  them  the  lie.  They  foretold  unwholesome  political  intru- 
sions— whatever  may  be  the  unwholesome  features  of  the 
present  operations  of  our  postal  system,  those  operations  are 
less  unwholesomely  attached  to  political  influences  than  ever 
before.  There  is  accordingly  every  reason  a  priori  to  assume 
that  the  Government  would  render  more  valuable  service  than 
that  rendered  by  the  express  companies  in  the  remaining  sec- 
tion of  the  express  field  unoccupied  by  it  and  still  occupied 
only  by  the  express  companies. 

But  there  is  no  necessity  for  relying  upon  a  priori  reasoning. 
The  results  to  be  achieved  by  the  consolidation  of  the  express 
service  of  the  land  into  the  postal  system  of  the  land  are 
definite  and  demonstrable. 

EXPRESS  SERVICE  VS.  PARCEL-POST 

Before  defining  and  demonstrating  the  advantages  of  a 
Government  postal  express,  however,  it  may  be  necessary  to 
discuss  more  fully  the  features  which  diflferentiate  at  present 
the  parcel-post  from  the  express  service. 

They  fall  into  two  classes,  (a)  Special  forms  of  service, 
and  (b)  Rates. 

Under  (a)  : 

Express  Company  Parcel  Post 

1.  Collects  the  parcel  free  of     1.    

charge. 

2.  The  fee^includes  insurance  2.  Special  fees  for  all  insur- 
up  to  $50  without  charge ;  ance  —  insurance  limit, 
additional  insurance  up  to  $100. 

any  amount  may  be  con- 
tracted for  by  special  fees. 

3.  All  sizes  and  weights  are  3.  Weight  limit— 70  lbs.  (300 
accepted.  miles),  50  lbs.  (above  300 

miles).  Size  limit  —  84 
inches,  length  and  girth 
combined. 

21 


4.  Collects  fee  from  con-  4.  Collects  fee  from  consig- 
signee  at  destination  free  nee  at  destination  at  a  fee. 
of  charge. 

5.  Collects  cost  of  article  it-  5.  Collects  cost  of  article  up 
self  to  any  amount.  to  $100. 

6.  Buys  articles  for  custom-    6.  

ers  at  a  fee. 

7.  Sells  articles   for  custom-     7.    

ers  at  a  fee. 

It  will  be  immediately  realized  that  some  of  the  features  of 
the  express  service  which  are  not  rendered  at  present  by  the 
parcel-post  could  be  and  should  be  rendered  by  the  parcel-post 
for  one  fee  without  separate  charges.  On  the  other  hand,  it 
will  be  realized  that  some  of  these  features  should  be  rendered 
by  the  parcel-post  only  as  separate  privileges  for  which  sepa- 
rate fees  should  be  charged,  as,  for  instance,  the  service  of 
collecting  parcels  from  the  shipper.     (Note  2.) 

For  instance,  there  seems  to  be  no  good  reason  for  limits 
upon  the  size  and  weight  of  the  packages  in  the  parcel-post. 
These  limits  have  steadily  been  expanded  in  the  parcel-post 
system  from  its  inception,  and  the  process  has  so  strikingly 
demolished  whatever  arguments  for  size  and  weight  limits 
may  have  previously  been  considered  that  they  no  longer 
^eem  vaHd. 

In  Austria,  Belgium,  Denmark,  Germany,  Hungar}^,  Norway, 
Rum.ania,  the  old  Russia  and  Switzerland,  packages  weighing 
up  to  110  pounds  may  be  sent  by  parcel-post  (and  after 
100  pounds  the  freight  service  of  the  railroads  is  readily 
available  in  the  United  States  as  elsewhere).  In  1915  France 
and  Italy  imposed  weight  limits  of  22  pounds.  In  Belgium, 
Germany,  Hungary,  Norway,  Rumania  and  Sweden  there  is 
no  size  limit,  except  that  in  certain  cases  special  fees  are 
charged  for  unusually  large  sizes.  In  Italy,  the  limit  is  24 
inches  in  any  one  dimension,  although  in  certain  cases  packages 
41  inches  long  are  accepted.  The  limit  in  Denmark  is  39 
inches  in  any  dimension.  In  France,  the  limit  is  60  inches  in 
any  direction.  With  no  limits  upon  weight  and  size,  the 
parcel-post  might  handle  the  problem  of  especially  cumber- 
some articles  whose  size  is  disproportionately  large  for  their 
weight  by  following  the  example  of  the  express  companies, 
charging  a  special  rate  twice  as  large  as  the  normal  rate. 
And  as  to  shipments  so  bulky  that  especial  transportation 
facilities  are  needed  for  them  another  page  might  be  taken 
from  the  books  of  the  express  companies,  and  special  pre- 

22 


liminary  arrangements  stipulated  before  such  shipments  are 
accepted. 

Moreover,  the  experience  of  other  countries  proves  that 
there  is  no  insurmountable  obstacle  to  removing  the  limit  upon 
the  amount  for  which  a  package  may  be  insured.  Merely, 
special  provisions  might  be  necessary,  and  perhaps  an  addi- 
tional fee  above  the  normal  insurance  fee  charged,  for  articles 
such  as  jewelr}',  for  which  space  in  safes  would  have  to  be 
reserved,  and  for  bullion,  etc.  The  following  countries  seem 
to  have  no  insurance  limit:  Austria,  Denmark,  Germany, 
Hungar}',  Portugal,  Rumania,  the  old  Russia,  Sweden,  Swit- 
zerland. The  limit  in  France  is  $1,000;  in  Italy,  $200.  In 
addition,  some  countries  give  automatic  indemnity  without 
separate  insurance  fee,  up  to  a  small  amount. 

Similarly,  now  that  the  parcel-post  experiments  for  small 
amounts  have  proved  successful,  the  limit  upon  the  amount 
collected  from  the  consignee  for  the  expressed  article  itself 
could  be  and  should  be  either  removed  or  greatly 'advanced, 
the  fee  for  this  senice  advancing  with  the  amount  collected. 
Xor  does  any  cogent  barrier  present  itself  against  a  separate 
division  in  the  parcel-post  system  to  sell  articles  consigned 
to  it,  or  even  to  buy  them,  the  fee  again  synchronizing  with 
the  amount  of  the  principal  involved. 

The  features  inherent  in  the  express  service  and  not  now 
in  the  parcel-post,  as  the  express  service  and  the  parcel-post 
now  function,  might  be  preserved  by  either  of  two  methods. 
They  might  be  added  to  the  present  parcel-post  as  separate 
features  to  be  utilized  only  when  especially  desired  and  for 
which  separate  fees  would  be  levied.  Or  else  the  Government 
postal  express  might  be  organized  into  two  separate  divisions — 
one  for  the  services  now  rendered  by  the  parcel-post,  with 
possibly  certain  additional  fees  for  certain  secondary  features, 
to  be  determined  by  experience  in  administration;  and  the 
other  for  the  services  now  rendered  by  the  express  companies, 
except  those  proved  by  experience  in  administration  to  be 
homogeneous  with  the  parcel  post  service  proper,  and  hence 
properly  adhering  to  the  first  division.  Either  the  method  of 
complete  consolidation  or  the  method  of  two  divisions  would 
meet  the  exigencies  of  the  service — only  the  results  of  expe- 
rience and  experiment  could  award  greater  merit  to  one  or 
the  other. 

The  fact  that  these  separate  functions  of  the  express  service 
are  of  too  great  value  and  in  too  great  demand  to  be  eliminated 
is  seen  by  a  study  of  the  relation  of  the  express  shipments  and 
the  parcel-post  shipments  to  the  express  and  the  parcel-post 
rates,   this   constituting   the   second    point   of   departure    (b) 

23 


between  the  public  method  and  the  private  method  of  trans- 
porting parcels.  The  differences  between  the  express  rates  and 
the  parcel-post  rates  may  be  graphically  realized  from  a  com- 
parative table.  As  will  be  seen,  the  differences  between  the 
two  sets  of  rates  may  be  roughly  summarized  in  one  sentence — 
as  a  rule,  the  parcel-post  rates  are  lower  than  the  express 
rates  for  the  shorter  distances  and  the  smaller  parcels. 

Accordingly,  if  the  value  of  the  service  rendered  by  the 
two  systems  were  nearly  identical,  the  express  company's 
shipments  would  be  almost  entirely  of  larger  parcels  and  for 
the  greater  distances.  But  as  a  matter  of  fact  it  is  generally 
known  that  a  large  proportion,  a  very  large  proportion,  of  the 
shipments  sent  by  express  are  at  weights  and  for  distances 
at  which  the  parcel-post  rates  are  lower  than  the  express  rates, 
often  decidedly  lower.  Only  the  need  to  a  shipper  of  all,  some, 
or  any  one  of  the  above-discussed  features  of  express  service 
not  duplicated  at  present  in  the  parcel-post  system  can  explain 
this  situation.  It  is  therefore  imperative  that  the  Government 
make  provision  for  all  these  features  in  establishing  a  Govern- 
ment postal  express.  ^ 


24 


COST  OF  LIVING 

A  moment's  reflection  is  sufiicient  to  show  that  a  Govern- 
ment postal  express  would  make  express  facilities  available 
to  a  far  greater  number  of  persons  than  are  served  at  present 
by  the  express  companies.  For  the  Government  postman  and 
the  Government  post  office  cover  the  country  as  a  whole — the 
express  companies  operate  only  along  railroad,  electric,  steam- 
boat and  stage-lines.  Moreover,  of  these  four  media,  83.7% 
of  the  mileage  is  by  railroad  and  only  2.9%  by  electric  line, 
13%  by  steamboat  Hne,  and  4/10  of  1%  by  stage-line. 

All  in  all,  the  mileage  covered  by  the  express  companies 
totals  307,400.  On  the  other  hand,  the  mileage  covered  by 
the  postal  system  is  1,374,056.  Of  this  amount,  1,112,556  rep- 
resents the  mileage  of  the  rural  routes  alone,  and  the  number 
of  persons  served  by  the  rural  routes  in  1917  was  more  than 
27,000,000.  Of  course,  it  is  certain  that  not  all  of  the  persons 
along  these  more  than  one  and  a  quarter  million  miles  were 
deprived  of  the  benefits  of  an  express  service,  but  it  is  equally 
certain  that  many  of  them  were,  and  it  is  probable  that  the 
majority  of  them  were. 

But  it  is  the  extension  of  the  express  facilities  to  just  that 
element  of  the  population  living  off  the  railroads  and  on  the 
rural  post  routes  in  which  lie  the  greatest  potential  benefits 
that  ail  express  service  can  render  to  the  nation.  For,  speak- 
ing by  and  large,  most  of  this  population  is  engaged  in  farm- 
ing: and,  conversely,  possibly  the  majority  of  the  producers 
of  focdstufi's  in  the  country  live  off  the  railroads  and  on  the 
rural  post  routes.  Now,  it  is  stated  on  reliable  authority  that 
of  each  dollar  expended  by  the  consumer  for  food  in  New 
York  City,  for  instance,  the  farmer  gets  only  from  thirty- 
five  to  fifty  cents.  In  other  words,  at  least  40%  of  the  cost  of 
food  is  represented  by  the  cost  of  getting  the  products  of  the 
farm  to  the  ultimate  purchaser.  The  role  thus  played  in  the 
drama  of  the  high  cost  of  foodstuffs  and  the  high  cost  of 
living  generally  is  apparent.  Equally  apparent  is  the  role 
which  a  simplification  of  or  a  reduction  in  the  processes  of 
getting  food  from  the  farm  directly  to  the  dinner  table  could 
play  in  lowering  the  cost  of  living. 

But  such  a  simplification  and  reduction  are  possible  only 
to  a  Government  postal  express.  At  present  the  rural  free 
delivery  does  make  provision  for  sending  farm  products 
directly  from  the  farmer  to  the  consumer,  but  its  efforts  in 
this  direction  are  still  largely  embryonic.  For  the  machinery 
of   the  process  must  be  constructed  anew   and  the  task  of 

25 


construction  is  one  of  those  tasks  which  cannot  be  hurried. 
Qn  the  other  hand,  the  express  companies  have  built  up 
through  the  years  an  extensive  and  efficient  machinery  for 
"farm  to  table"  transactions,  but  their  services  in  this  direction 
are  hampered  by  the  fact  that  the  companies  are  limited  on 
the  whole  to  the  territory  adjacent  to  the  railroad  lines.  The 
fertilization  of  the  vast  farming  territory  tapped  by  the  post 
office  by  the  express  company  facilities  should  give  birth  not 
many  months  after  its  consummation  to  the  one  most  potent 
factor  at  present  available  to  lower  the  retail  cost. of  food- 
stuffs to  an  appreciable  extent. 

Under  such  an  arrangement,  a  separate  bureau  would  be 
established  in  the  postal  system,  covering  both  the  parcel-post 
and  the  postal  express.  This  bureau  would  collect  names 
of  farmers — both  those  voluntarily  resorting  to  it  and  those 
reached  in  its  own  canvasses — ^who  would  send  their  products 
collect  on  delivery  "to  consumers.  Similarly,  lists  of  consum- 
ers desiring  thus  to  be  served  would  be  collected.  It  would 
be  no  difficult  matter  for  individuals  on  the  two  lists  to  get 
into  touch  with  one  another,  and  to  deal  directly  through  either 
the  parcel-post  or  the  postal  express.  Where  they  could  not 
by  their  own  arrangements  get  into  touch  with  one  another, 
the  bureau's  task  would  be  to  get  them  into  touch.  And  where 
a  farmer  and  a  consumer  could  not  even  thus  be  brought  into 
direct  contact,  the  bureau  would  act  as  the  agent  for  each — 
maintaining  warehouses,  if  necessary,  to  which  farmers  would 
send  goods  to  be  sold  at  a  stated  minimum  price  and  to  which 
consumers  would  resort  for  their  purchases.  Since  these 
functions  are  already  performed  to  a  slight  extent  by  the 
express  companies,  there  should  be  little  question  of  the  legal- 
ity of  such  procedure  by  the  Government.  If  necessary,  addi- 
tional legislation  might  be  sought;  nor  after  the  activities  of 
the  Government  during  the  Great  War  would  there  be  much 
likelihood  of  such  legislation  being  declared  unconstitutional. 


w— 


26 


ECONOMY  IN  OPERATION 

It  has  been  seen  that  about  50%  of  the  charges  collected 
by  the  express  companies  for  the  transportation  of  packages 
go  to  the  railroads,  50%  remaining  to  the  express  companies. 
To  be  exact,  in  1917  the  sum  of  $222,860,373  represented  the 
collection  charges  by  the  express  companies,  of  which  $113,- 
535,059,  or  51%,  went  to  the  railroads,  leaving  to  the  express 
companies  from  transportation,  $109,325,314.  Revenues  of  the 
express  companies  from  operations  other  than  transportation 
brought  their  total  revenues  up  to  $115,920,129.  Their  operat- 
ing expenses  were  $113,721,057.  In  other  words,  for  every 
10%  by  which  Government  operation  of  the  express  service 
might  decrease  the  operating  expenses  of  the  express  service, 
even  if  the  present  contracts  with  the  railroads  are  assumed 
by  the  Government,  there  should  be  a  saving  in  the  amount  of 
express  rates  assessed  the  public  of  no  less  than  5%. 

Such  savings  seem  inevitable  under  a  Government  postal 
express.  Vast  as  is  the  extent  of  the  parcel-post  operations, 
there  is  no  evidence  that  all  or  even  most  of  its  ramifications 
have  yet  reached  that  point  of  magnitude  where  the  addition  of 
new  business  means  an  increasing  instead  of  a  decreasing 
cost  per  unit.  Let  it  be  remembered  that  the  parcel-post 
carried  in  1917  some  1,120,000,000  parcels  and  the  express 
companies  some  280,000,000;  so  that,  taking  into  account  the 
secondary  features  of  the  express  service  not  performed  at 
present  by  the  post  office,  the  inclusion  of  the  express  service 
in  the  parcel  post  would  increase  the  latter's  activities  not 
much  more  than  25%.  Certainly,  it  may  be  fairly  assumed 
that  any  such  services  in  which  the  law  of  increasing  costs 
per  unit  might  hold  would  be  at  least  counter-balanced  by 
services  in  which  the  law  of  diminishing  costs  per  unit  would 
hold;  so  that  we  may  consider  the  economies  of  a  Government 
postal  express  absolutely  instead  of  relatively. 

CONSOLIDATION  OF  EQUIPMENT 

In  the  first  place,  the  express  companies  require  for  their 
operations  much  the  same  kind  of  equipment  as  is  required 
by  the  Post  Office  Department.  Express  cars  and  railway 
postal  cars;  horse-drawn  express  delivery  wagons  and  horse- 
drawn  post  office  delivery  wagons;  motor  express  trucks  and 
motor  post  office  trucks ;  express  company  horses  and  Post 
Office  Department  horses — all  do  similar  work,  along  similar 
routes,  in  similar  sections  of  similar  cities  at  similar  times  of 
the  day  and  under  similar  conditions.    The  economies  possible 

27 


by  consolidation  are  lessened  only  slightly  by  the  fact  that 
on  the  main  railroad  trunk  routes  express  traffic  is  often 
carried  by  trains  composed  entirely  of  express  cars,  in  which 
there  can  obviously  be  little  saving  by  consolidation  of  the 
express  System  and  the  parcel-post.  In  passing,  it  should  be 
noted  that  the  railway  mail  cars  are  furnished  by  the  railroads, 
and  in  most  cases  the  trucks  and  wagons  and  automobiles 
used  in  transporting  mail  through  a  city  render  that  service 
by  contracts  of  the  Post  Office  Department  with  their  owners ; 
so  that  the  savings  in  consolidation  would  accrue  indirectly 
by  lower  contract  rates  rather  than  directly. 

Especially  in  smaller  communities  and  in  the  thinly  settled 
outskirts  of  larger  communities  can  one  wagon  or  one  motor 
truck  often  render  the  service  now  requiring  one  express 
wagon  or  motor  truck  and  one  post  office  wagon  or  motor 
truck.  On  less  crowded  routes  and  on  less  crowded  trips, 
one  railroad  car  can  often  render  the  service  now  requiring 
an  express  car  and  a  railway  post  office  car.  And  on  the 
crowded  routes  and  in  the  thickly-populated  cities,  if  one 
vehicle  of  transportation  cannot  render  the  service  now  re- 
quiring two,  at  least  in  many  cases  four  such  vehicles  can 
render  the  service  now  requiring  five.     (Note  3.) 

CONSOLIDATION  OF  AGENCIES 

In  the  second  place,  it  has  been  seen  that  each  of  the  express 
companies  of  the  United  States  concentrates  its  activities 
upon  a  certain  section  of  the  country.  That  is  to  say,  on 
many  occasions  a  package  traveling  a  long  distance  may  be 
handled  by  two  or  three,  or  sometimes  even  four  express 
companies  before  it  reaches  its  destination.  The  wastes  and 
superfluous  costs  therein  are  evident.  There  is  not  only  the 
direct  cost  of  unloading,  transferring,  and  re-loading  parcels 
from  one  express  company  to  another — and  at  many  points 
express  offices  and  yards  are  the  width  of  an  entire  city  apart. 
There  is  also  the  cost  of  the  complicated  bookkeeping  neces- 
sary to  determine  for  what  part  of  the  journey  of  a  package 
each  express  company  has  been  responsible  and  accordingly 
to  what  share  of  the  express  charge  each  is  entitled.  That  this 
cost  is  no  mere  creature  of  a  brain  hell-bent  upon  Govern- 
ment ownership  is  proved  by  the  fact  that  of  a  total  operating 
expense  of  $113,721,057  in  1917,  exactly  $32,272,795  or  30% 
was  paid  to  office  employees.  As  it  stands,  this  is  the  largest 
single  item  of  expense  in  the  express  business,  nor  does  .this 
sum  include  the  salaries  of  the  officers  and  general  superin- 
tendents and  minor  managers,  nor  the  salaries  of  their  clerks 
and  subordinates  directly  engaged  in  the  managing  and  super- 

28 


intending  aspects  of  the  express  business.  A  consolidation  of 
the  express  companies  of  the  country  into  one  agency  would 
end  that  large  proportion  of  office  work  attendant  upon  the 
calculation  of  the  pro  rata  returns  to  separate  express  com- 
panies, and  upon  the  issue  of  separate  receipts,  waybills,  etc., 
and  would  hence  result  in  still  further  reduction  of  express 
rates. 

CONSOLIDATION  OF  PERSONNEL 

But,  in  the  third  place,  there  are  also  to  be  considered  the 
expenses  represented  by  the  employes  not  in  the  offices — 
those  on  the  vehicles,  around  the  stables  and  garages,  and  on 
the  trains.  Consolidation  of  the  express  service  with  the  postal 
service  would  result  in  a  consolidation,  not  only  of  equip- 
ment, but  also  of  personnel.  If  one  truck  does  the  work  of 
two  trucks,  or  four  trucks  of  five,  two  truck  employees  can  do 
the  work  of  four,  or  eight  of  ten.  Where  one  railway  car 
does  the  work  of  two,  one  railway  car  crew  can  do  the  work 
of  two  crews.  That  such  saving  would  have  a  not  altogether 
inconsiderable  effect  upon  the  operating  expenses  and  hence 
upon  the  rates  of  the  express  companies  is  evident  from  the 
fact  that  the  wages  of  vehicle,  stable,  garage  and  train  em- 
ployees amounted  in  1917  to  $23,547,906,  or  20%  of  the 
operating  expenses  of  the  express  companies. 

CONSOLIDATION  OF  OFFICES 

In  the  fourth  place,  there  were  in  the  United  States  in  1917 
some  55,000  post  offices.  The  number  of  express  offices  is 
not  definitely  known,  but  it  is  probably  in  the  neighborhood  of 
40,000.  The  possibilities  of  saving  by  cooperation  and  con- 
solidation here  are  again  obvious,  particularly  when  it  is  re- 
membered that  a  large  section  of  the  activities  of  practically 
every  post  office  is  given  over  to  handling  packages  mailed 
under  the  parcel-post.  Especially  in  many  smaller  cities  and 
towns,  post  offices  could  handle  with  little  increased  cost  the 
business  now  requiring  separate  express  offices  in  those  locali- 
ties. Where  post  office  facilities  are  inadequate  to  handle  the 
demand  now  being  made  upon  them,  the  present  express  com- 
pany offices  might  readily  serve  to  save  the  cost  of  additional 
construction  and  facilities  in  the  future.  The  amount  of 
rental  saved  merely  by  the  consolidation  of  many  different 
express  offices  may  be  indicated  by  reference  to  the  recent 
experience  of  the  Railroad  Administration  in  a  parallel  situa- 
tion. Similarly,  there  is  possible  an  extensive  consolidation 
and  economizing  in  stables  and  garages,  office  furniture  and 
supplies. 

29 


THE  POSTAGE  STAMP 

In  the  fifth  place,  there  is  the  saving  represented  in  the 
very  nature  of  the  postage  stamp  itself,  which  can  be  sold  and 
accepted  for  payment  of  charges  only  by  the  Post  Office 
Department.  Much  of  the  expense  of  the  express  companies 
in  issuing  receipts,  making  statements,  checking  upon  money 
received,  etc.,  could  be  saved  if  the  express  parcels  could 
proceed  under  a  postage  stamp. 

MISCELLANEOUS  SAVINGS 

Finally,  there  are  the  hosts  of  miscellaneous  items  of  operat- 
ing expenses  in  v^hich  we  must  be  led  to  expect  saving  by  all 
other  experience  in  consolidating  similar  agencies  performing 
similar  services.  Some  of  these  expenses  might  even  be  elimi- 
nated entirely  under  Governmnt  ownership  and  control.  Such 
are  the  cost  of  superintendence  and'  auditing,  insurance,  the 
cost  of  securing  traffic  commissions,  advertising  and  law  ex- 
penses, to  say  nothing  of  the  profits  paid  stockholders  in  normal 
years. 

The  amount  of  these  savings  can  only  be  roughly  surmised ; 
but  in  1912,  Mr.  David  J.  Lewis  estimated  that  they  would 
amount  to  at  least  40%  of  the  total  operating  expenses.  In 
this  connection,  it  may  be  remarked  in  passing  that  Mr.  Lewis's 
qualifications  for  throwing  light  upon  the  express  service 
problem  include  not  only  theoretical  knowledge  gained  by 
years  of  study  of  the  problem,  both  here  and  abroad;  but 
also  practical  knowledge  of  ways  and  means,  as  attested  by 
general  belief  that  the  establishment  of  a  parcel-post  in  the 
United  States  was  due  to  his  analyses  more  than  to  the  efforts 
of  any  other  one  man;  and  also  by  the  fact  that  when  the 
Government  in  1918  assumed  responsibility  for  the  manage- 
ment of  the  telephone  and  telegraph  systems  of  the  land,  Mr. 
Lewis  was  made,  and  at  the  time  of  writing  is,  the  general 
manager  in  charge  of  those  systems  while  under  Government 
control.  Certainly,  in  view  of  the  economies  enumerated  above 
as  inherent  in  Government  ownership  and  control  of  the  ex- 
press companies,  on  the  face  of  it  Mr.  Lewis's  statement  seems 
extremely  reasonable. 

THE  CONSEQUENT  REDUCTION  IN  RATES 

So  that,  if  Mr.  Lewis's  estimate  were  accurate,  and  remem- 
bering that  the  operating  expenses  of  the  express  companies 
in  1917  represented  one-half  of  the  total  charges  made  by  the 
express  companies  for  transportation,  a  reduction  of  20%  in 
the   express   rates   should   accompany   the   acquisition   of   the 

30 


express  companies  by  the  Government,  other  things  being 
equal.  But  other  things  are  not  equal.  Lower  rates  mean 
increased  business ;  and  in  an  agency  which  has  developed 
the  field  at  its  disposal  so  inadequately  as  have  the  express 
companies,  each  additional  unit  of  business  can  be  handled  at 
a  lower  cost  and  hence  at  a  greater  profit  than  each  previous 
unit.  This  consideration  was  the  primary  one  advanced  by 
the  Interstate  Commerce  Commission  in  ordering  16%  reduc- 
tion in  the  express  rates  in  1914.  So  that,  the  lower  amount 
of  profit  per  parcel  being  counterbalanced  by  a  greater  number 
of  parcels,  the  economy  in  a  Government  ix)stal  express  should 
be  represented  by  a  lowering  of  express  rates  anywhere  from 
25%  to  35%  of  the  present  rates. 

But  up  to  this  point  our  calculations  have  assumed  that 
under  a  Government  postal  express  the  railroads  would  con- 
tinue to  obtain  their  50%  of  the  charges  on  each  package 
transported  by  express.  This  method  of  calculating  the  return 
due  to  the  railroad  is  certainly  ingenious  in  its  simplicity  and 
lack  of  scientific  basis,  but  it  is  just  as  certainly  unfair  to  the 
shipper  of  parcels  by  express.  Let  us  consider,  for  example, 
two  shipments  of  similar  articles  under  similar  conditions — 
one  from  New  York  City  to  Yonkers,  New  York,  a  distance  of 
some  20  miles;  the  other  from  New  York  City  to  San  Fran- 
cisco, a  distance  of  more  than  3,000  miles.  In  each  case,  the 
express  companies  collect  the  parcel  and  deliver  it  to  the  rail- 
road in  New  York  City;  and  collect  the  parcel  from  the  rail- 
road and  deliver  it  to  the  consignee,  in  the  first  case  in 
Yonkers;  and  in  the  second  case  in  San  Francisco.  In  both 
cases,  the  services  rendered  by  the  express  companies  are  about 
identical,  aside  from  tlie  different  lengths  of  time  during  which 
space  and  protection  in  express  cars  must  be  afiforded.  But 
the  services  rendered  by  the  railroad  companies  are  far  dif- 
ferent in  the  two  cases.  In  the  first  case,  the  parcel  is  carried 
for  less  than  an  hour;  in  the  second  place,  for  some  days. 
Obviously,  the  share  of  the  railroad  in  the  entire  service  ren- 
dered in  transporting  the  parcels  is  less  in  the  first  case  than 
in  the  second,  but  in  each  case  it  gets  the  same  share  of  the 
total   express   charge — namely,   50%. 

Such  a  system  in  its  very  nature  must  thwart  any  attempt 
to  make  express  rates  reflect  the  value  of  express  service. 
For,  of  course,  the  rates  actually  fixed  endeavor  to  do  justice 
to  both  the  express  companies  and  the  railroads  in  each  case 
considered  above.  In  the  first  case,  the  rate  must  be  high 
enough  so  that  50%  of  it  will  not  be  too  glaringly  little  for 
the  express  companies  to  retain  for  their  relatively  more  im- 
portant and  more  costly  service  of  collecting  a  parcel  in  New 

ii 


York  and  delivering  it  in  Yonkers.  In  the  second  case,  the 
rate  must  be  high  enough  so  that  50%  of  it  will  not  be  too 
glaringly  little  to  turn  over  to  the  railroad  for  their  relatively 
more  important  and  more  costly  service  of  carrying  the  parcel 
across  the  continent.  The  railroad  directors  and  express 
company  directors  cannot  be  expected  to  have  reached  a  fair 
compromise  after  fighting  for  their  own  interests  when  the 
contracts  were  originally  made,  for,  as  has  been  seen,  their 
interests  are  largely  identical.  It  would  seem,  then,  that  only 
the  shipper  sending  a  parcel  several  hundred  miles  is  charged 
a  fee  commensurate  with  the  value  of  the  service  rendered 
him.  It  would  seem  that  shippers  sending  parcels  shorter  dis- 
tances must  be  charged  too  much  and  that  shippers  sending 
parcels  longer  distances  must  be  charged  too  little.  A  glance 
at  parcel  post  rates  proves  the  validity  of  this  surmise,  for  par- 
cel post  rates  are  lower  than  express  rates  for  shorter  dis- 
tances and  higher  for  longer  distances.  Under  the  present 
system  of  competition  between  the  parcel  post  and  the  express 
companies,  the  nature  of  the  contracts  between  the  express 
companies  and  the  railroads  compels  express  rates  which  un- 
fairly discriminate  against  the  express  companies  at  the  shorter 
distances  and  unfairly  discriminate  against  the  parcel-post  at 
the  longer  distances. 

However,  there  is  no  evidence  in  all  this  that  the  express 
rates  as  actually  levied  may  not  strike  a  just  and  equitable 
average  between  the  rates  too  low  and  the  rates  too  high. 
Let  us  therefore  compare  for  a  moment  the  railroad  costs 
of  the  express  traffic  with  the  railroad  costs  of  the  Postal 
System.  It  has  been  seen  that  in  1917  the  express  companies 
paid  the  railroads  for  transporting  some  280,000,000  parcels 
the  sum  of  $113,535,059.  In  the  fiscal  year  ending  June  30, 
1917,  the  Post  Office  Department  paid  railroads  and  other 
transportation  lines  for  services  in  transfK>rting  all  postal  mat- 
ter, including  almost  1,120,000,000  parcels,  the  sum  of  $63,- 
358,997.  (The  basis  for  remuneration  to  the  railroads  for 
transporting  postal  matter  is  the  size  and  the  weight  of  the 
matter  transported.)  Of  course,  it  must  be  remembered  that 
for  the  postal  service  the  railroads  furnished  the  cars.  It 
must  be  remembered  also  that  the  parcels  of  the  express  com- 
panies averaged  heavier  weights  and  travelled  longer  average 
distances  than  the  parcels  of  the  parcel-post.  Nevertheless, 
the  enormous  discrepancy  between  the  two  figures  cannot  be 
thus  entirely  explained  away.  Some  of  the  discrepancy,  and 
obviously  a  considerable  part  of  it,  can  be  traced  only  to  an 
unjustifiably  high  return  paid  the  railroads  by  the  express  com- 
panies.   (Note  4.) 

32 


Moreover,  the  amount  thus  obtained  by  the  railroads  in 
1917  from  its  express  traffic  was  equivalent  to  about  3>^% 
of  the  total  railroad  revenues,  although  it  represented  50% 
of  the  total  express  revenue.  Accordingly,  even  a  radical 
slashing  of  express  rates,  with  its  resulting  beneficial  stim- 
ulation to  the  express  service  of  the  country,  could  hardly 
disturb  the  well-being  of  the  railroads  to  any  serious  extent. 

Again,  the  various  functions  performed  by  the  express  com- 
panies as  subsidiary  to  the  express  business  proper  are  on  the 
whole  paralleled  by  similar  functions  of  the  Government  or 
other  agencies.  Money  orders,  both  domestic  and  interna- 
tional, are  issued  by  the  Post  Office  Department,  and  in  1917 
were  issued  to  the  extent  of  $854,963,806  as  against  $145,- 
934,982  of  the  express  companies.  Telegraph  and  cable  trans- 
fers are  readily  issuable  by  the  telegraph  companies  themselves. 
Similarly,  the  travelers'  cheques  issued  by  the  express  com- 
panies could  without  difficulty  and  with  no  less  convenience 
be  issued  by  our  large  banking  institutions  performing  that 
service. 


It  is  therefore  respectfully  submitted  that  any  comprehen- 
sive consideration  of  the  express  service  field  in  the  United 
States  can  point  only  in  one  direction — toward  the  consolida- 
tion of  the  express  service  of  the  United  States  with  the 
Postal  System  of  the  United  States,  under  the  control  and 
management  of  the  Post  Office  Department. 


33 


METHODS  OF  ESTABLISHING  A  GOVERN- 
MENT POSTAL  EXPRESS 

Many  studies  advocating  Government  ownership  and  man- 
agement of  public  utilities  find  it  necessary  to  hitch  their 
program  to  one  definite  mode  of  procedure.  In  the  case  of  the 
express  service,  however,  no  such  necessity  exists.  Several 
modes  of  procedure  are  open,  and  if  one  of  them  seems  prefer- 
able, none  of  them  is  impossible,  inadequate  or  inefficient.  The 
most  desirable  method  now  available  of  substituting  a  Gov- 
ernment postal  express  for  our  express  companies  would  seem 
to  be  a  legal  and  constitutional  confiscation  of  their  property 
and  rights,  with  adequate  compensation.  The  adequacy  of  the 
compensation  would  naturally  entail  much  discussion — on  the 
one  side  would. stand  tho'^e  insisting  that  the  (Government  pay 
for  only  the  contemporaneous  value  of  the  physical  property 
taken  over;  and  on  the  other  side  would  stand  those  insisting 
that  the  contracts  with  the  railroads,  good  will,  and  other  intan- 
gible assets  of  the  express  companies  possess  true  value  despite 
thair  intangible  nature  and  should  accordingly  be  purchased. 
Supporting  the  first  group  would  be  the  policy  of  the  present 
Government  which,  as  we  shall  see,  has  placed  the  capital  of 
the  express  combination  temporarily  handling  the  express 
business  of  the  country  at  $30,000,000,  or  approximately  the 
value  of  the  actual  physical  property  represented  by  that  com- 
bination. Supporting  the  second  group  is  the  Interstate  Com- 
merce Commission,  through  its  representative,  Franklin  K. 
Lane,  in  its  1912  decision  in  the  matter  of  the  express  rates. 

A  third  method  presents  itself,  but  its  adoption  could  be 
considered  only  as  deplorable,  even  as  reprehensible — namely, 
purchase  of  the  express  companies  at  their  paper  valuation. 
As  we  have  seen,  the  capitalization  of  the  express  companies 
bears  no  relation  to  the  value  of  their  property,  and  chiefly 
represents,  not  money  invested,  but  profits  accumulated.  As 
a  matter  of  fact,  the  Supreme  Court  of  the  United  States  some 
years  ago  decided  that  capitalized  excess  profits  may  not  be 
used  as  a  basis  of  computing  fair  rates  of  dividends  upon 
capital  as  against  the  state.  Possibly  Congress  might  find  it 
wise  to  settle  the  whole  problem  in  any  bill  providing  for 
Government  acquisition  by  abiding  in  the  judgment  of  the 
Interstate  Commerce  Commission,  leaving  the  Government  or 
the  express  companies,  or  both,  the  right  to  appeal  to  the 
Supreme  Court  if  dissatisfied. 

The  express  service  would  represent  too  unimportant  and 
too  different  an  activity  from  railroad  freight  service  to  be 

34 


efficiently  handled  now  by  the  railroads.  And  mere  regulation, 
as  has  been  seen,  affords  no  solution,  for  the  profits  and  the 
equipment  represent  but  an  infinitesimal  part  of  the  operating 
expenses. 

At  this  point,  the  Socialist  or  the  socialist  or  the  person 
who  falls  loosely  into  the  category  of  "radical"  or  perhaps 
even  the  merely  ''liberal"  advocate  of  the  public  ownership  of 
public  utilities  will  doubtless  exclaim:  "But  why  compensate 
at  all?  Isn't  it  bad  enough  to  have  sd  long  permitted  a 
group  of  entrepreneurs  to  grow  rich  by  exploiting  for  their 
own  .gain  a  field  which  all  experience  outside  the  confines  of 
North  America  proves  a  field  of  public  endeavor?  Why  add 
insult  to  injury  by  actually  paying  them  for  rendering  unto 
the  people  the  things  which  belong  to  the  people?  Why  shall 
not  the  Government  establish  its  own  express  service,  as  it 
established  the  parcel-post,  and  leave  the  express  companies, 
so  long  unchallenged  in  their  activities,  to  meet  Government 
competition  as  best  they  may?  If  they  can  meet  it,  well  and 
good — if  they  can't,  the  essentially  parasitic  nature  of  their 
business  is  proved  beyond  cavil." 

Very  good,  gentlemen;  and  if  he  may  be  permitted  a  per- 
sonal reference,  the  writer  of  these  lines  is  in  perfect  accord 
with  you.  The  rates  of  the  private  express  companies  under 
your  plan  would  still  be  under  the  control  of  the  Interstate 
Commerce  Commission,  and  accordingly  these  private  agencies 
would  be  unable  to  compete  unfairly  with  the  new  Govern- 
ment service  by  establishing  along  any  of  the  more  popular 
routes  rates  far  below  the  cost  of  the  service,  in  order  to  cripple 
the  Government  service  along  these  routes  and  hence  in  its 
entirety.  Moreover,  there  is  every  probability  that  the  legis- 
lative grant  to  the  Government  of  a  monopoly  of  the  express 
service  of  the  United  States  would  be  upheld  by  the  courts, 
for  a  good  case  could  be  made  out  for  the  essential  nature  of 
the  express  business  as  a  part  of  the  mail  business  in  which  the 
Government  has  been  granted  a  monopoly.  Indeed,  monopoly 
w'as  originally  granted  the  Government  mail  service  to  pre- 
vent the  competition  which  the  Wells-Fargo  Company  soon 
after  its  organization  was  conducting  in  the  business  of  carry- 
ing letters. 

But,  gentlemen,  what  are  the  chances  that  a  sufficient  num- 
ber of  your  fellow-countrymen  can  be  brought  into  accord 
with  you — not  merely  in  their  intellectual  convictions,  but  in 
convictions,  intellectual  and  emotional,  so  strong  that  they  can 
be  transmuted  into  a  sufficient  number  of  votes  in  the  ballot 
box  to  make  our  lawmakers  at  Washington  give  heed — at  least 
in  the  immediate   future?     For  the  problem  of  the  express 

35 


companies  will. come  up  for  adjudication,  temporary  or  long- 
enduring,  within  some  months,  or  at  least  within  a  year  or 
two.  Obviously,  the  present  status  of  the  express  companies, 
as  described  below,  will  end  soon  after  the  war.  And  Govern- 
ment ownership  of  the  express  service,  as  has  been  indicated, 
is  so  infinitely  more  advantageous  than  private  ownership,  that 
if  Government  ownership  can  be  obtained  only  by  your  (and 
my)  method,  and  if  we  divide  our  ranks  by  refusing  to  sup- 
port any  other  method  short  of  one  vicious  in  both  principle 
and  practice,  the  country  may  return  once  more  to  the  private 
express  company  method.  As  has  been  indicated,  the  whole 
problem  concerns-  scarcely  ten  or  twenty  millions  of  dollars 
in  a  business  whose  operations  amount  to  more  than  two 
hundred  millions;  and  whatever  method  be  adopted,  it  can 
hardly  effect  a  difference  of  5%  one  way  or  another  in  express 
rates.  If  the  question  were  one  similar  to  the  Government 
ownership  of  railroads,  it  would  indeed  be  worth  delay  to 
obtain  a  comprehensively  adequate  method  of  taking  them  over 
by  the  Government,  for  marked  differences  in  rates  would  then 
result.  But  the  differences  in  express  rates  involved  in  dif- 
ferent methods  of  purchasing  the  companies  would  hardly 
recompense  for  the  delay  involved  in  the  postal  service's 
mastery  of  a  new  technique,  in  its  assimilation  of  details  which 
can  be  mastered  only  through  experience,  in  tedious  litigation, 
in  political  wirepulling  and  manipulation,  and  in  determina- 
tion of  constitutionality,  all  of  which  features  will  accompany 
the  establishment  of  a  new  Government  postal  express  inde- 
pendent of  the  present  express  companies. 

For,  by  the  time  that  the  dissolution  of  the  American  Rail- 
way Express  Company  (see*  below)  will  come  up  for  final 
decision,  new  equipment  and  the  materials  for  new  equipment 
will  still  be  scarce,  very  scarce,  and  very  costly  in  the  United 
States.  It  would  be  unfairly  prejudicial  to  an  infant  Govern- 
ment postal  express  service  if  it  were  hampered  by  scarcity 
or  high  cost  of  equipment.  Indeed,  in  the  long  run,  in  an 
industrial  situation  which  for  many  months  after  peace  will  be 
unsettled  as  a  result  of  the  war,  it  might  even  be  more  eco- 
nomical to  purchase  the  express  companies  outright.  And 
if  once  the  express  service  is  released  to  its  former  owners,  the 
difficulty  of  prying  it  loose  again  will  involve  far  greater  loss 
than  the  loss  in  adopting  even  the  least  justifiable  method  of 
consolidating  it  in  the  Postal  Service. 


36 


THE  PRESENT  STATUS  OF  EXPRESS 
COMPANIES 

As  the  United  States  more  and  more  radically  altered  its 
industrial  processes  to  correlate  them  with  the  needs  impressed 
upon  the  national  life  by  the  Great  War,  the  express  com- 
panies more  and  more  plainly  gave  evidence  of  membership 
in  that  group  of  public  utilities  which  could  not  unaided 
weather  the  storm.  Not  so  soon  as  in  the  case  of  the  rail- 
ways, but  not  any  considerable  length  of  time  afterwards, 
Government  intervention  became  the  sine  qua  non  of  a  con- 
tinuation of  the  express  business  of  the  United  States  on  an 
efficient  plane.  Chi  May  28,  1918,  the  United  States  Railroad 
Administration  made  public  an  arrangement  with  the  express 
companies  by  which  the  express  service  of  the  country  has 
since  been  conducted  up  to  the  time  of  writing.  Of  that 
arrangement,  the  salient  features  follow: 

1.  A  new  express  company,  known  as  the  American  Rail- 
way Express  Company,  was  organized  by  the  Adams,  Amer- 
ican,  Southern  and  Wells-Fargo  Express  Companies. 

2.  The  new  company  is  capitalized  only  to  the  extent  of  the 
actual  property  and  cash  represented  in  its  formation  and 
activities — namely,  $30,000,000,  and  capital  stock  has  been 
issued  for  that  amount  and  further  stock  will  be  sold  at  par. 

3.  With  the  American  Railway  Express  Company  the  Rail- 
road Administration  made  a  contract  for  conducting  the 
express  business  on  all  carriers  included  in  the  Railroad  Ad- 
ministration. 

4.  Under  that  contract,  the  Railroad  Administration  receives 
51>4%  of  the  operating  revenues. 

5.  The  49^%  remaining  to  the  express  companies  must 
cover  the  operating  expenses,  taxes,  profits  and  a  dividend  of 
5%  on  the  stock  of  the  American  Railway  Express  Company. 

6.  In  any  profits  remaining,  the  first  2%  is  divided  equally 
between  the  Railroad  Administration  and  the  American  Rail- 
way Express  Company;  of  the  next  3%,  the  former  receives 
two-thirds  and  the  latter  one-third;  of  all  further  profits,  the 
former  receives  three-fourths  and  the  latter  one-fourth. 

7.  The  amount  of  the  express  rates  charged  and  control 
over  the  character  of  service  supplied  are  vested  in  the  Direc- 
tor-General of  Railroads. 

Subsequent  changes  in  the  arrangement  of  May  28,  1918, 
have  been  as  follows: 

37 


8.  In  July,  1918,  the  Interstate  Commerce  Commission  ap- 
proved an  increase  of  10%  in  express  rates,  all  of  which  was 
absorbed,  however,  according  to  both  the  Interstate  Commerce 
Commission  and  the  Director  General  of  Railroads,  in  wage 
increases  effective  July  1,  1918. 

9.  On  September  13,  1918,  the  Director  General  of  Rail- 
roads requested  of  the  Interstate  Commerce  Commission  an 
opinion  concerning  a  contemplated  absolute  increase  in  the 
express  rates  on  each  package,  irrespective  of  weight  and  dis- 
tance travelled.  The  proposed  increase  would  be  equivalent 
to  possibly  9%  on  all  traffic;  but  again,  according  to  the 
Director  General  of  Railroads,  it  would  cover  only  increased 
wages.  The  Commission  was  asked  only  if  the  proposed  in- 
crease would  net  the  sum  needed,  and  replied  on  October  22, 
1918,  in  the  affirmative.  However,  the  Commission  signifi- 
cantly called  attention  to  the  possibility  of  increasing  express 
revenues  by  lowering  the  percentage  on  all  express  charges 
received  by  the  railroads. 

10.  On  November  18,  1918,  President  Wilson  issued  a  proc- 
lamation specifically  taking,  through  Secretary  of  War  Baker, 
possession,  control,  operation  and  utilization  of  the  American 
Railway  Express  Company,  in  order  to  make  the  Government's 
control  over  that  agency  indisputably  clear.  The  powers  as- 
sumed by  the  Government  were  delegated  to  the  Director 
General  of  Railroads  to  be  utilized  according  to  the  prior  con- 
tract made  between  him  and  the  American  Railway  Express 
Company. 

11.  On  January  1,  1919,  an  increase  of  about  9%  in  ex- 
press rates  went  into  effect,  making  a  total  increase  since 
the  United  States  entered  the  European  War  of  about  19%, 
this  representing  the  only  increase  in  express  rates  since  the 
reduction  of  16%  ordered  in  1912  and  effective  in  1914,  and 
representing  also  a  smaller  increase  in  rates  than  was  found 
necessary  by  the  railroads  in  their  freight  traffic. 

ADVANTAGES 

The  advantages  of  this  arrangement  over  its  predecessor 
are  undeniable.  The  consolidation  of  effort,  the  reduction 
in  the  number  of  separate  express  agencies,  the  minimizing 
of  accounting,  the  simplification  of  management,  the  pooling 
of  equipment  and  facilities, — these  administrative  reforms 
should  result  in  a  marked  decrease  in  relative  operating  ex- 
penses. The  transfer  of  control  from'  a  moneyed  group — or 
rather  from  three  moneyed  groups — interested  primarily  in 
private  profits  to  a  public  official  seeking  only  service  to  the 
public,  this  similarly  is  a  definite  achievement.     The  limita- 

38 


tlon  of  the  capital  stock  to  the  actual  cash  value  of  the  prop- 
erty and  the  fixing  of  the  dividends  on  that  stock  at  a  nominal 
rate,  these  again  are  as  notable  gains  in  the  realm  of  the 
express  service  as  the  profit-sharing  arrangement  between  the 
Government  and  the  private  companies. 

WAGE  INCREASES 

As  has  been  seen,  the  increases  in  express  rates  since  the 
birth  of  the  American  Railway  Express  have  been  absorbed 
in  wage  increases.  Now,  in  a  statistical  study,  the  phrase 
''wage  increases"  will  connote  a  mere  item  of  expense,  but 
to  the  wage-worker  it  will  connote  happiness.  It  means  more 
nourishing  food;  it  means  more  wholesome  dwelling  con- 
ditions ;  it  means  more  schooling  for  the  children ;  it  means 
more  recreation ;  it  means  more  medical  care  and  less  illness ; 
it  means  especially  less  gnawing  fear  of  what  the  morrow 
may  hold.  The  example  of  the  Railroad  Administration  indi- 
cates the  widespread  services  in  lessening  want  or  even  in 
increasing  comforts  which  Government  control  brings  in  its 
wake — the  raising  of  all  wages  to  that  level  below  which  a 
decent  standard  of  living  cannot  be  maintained  and  the  aboli- 
tion of  artificial  and  undemocratic  special  wage  privileges  of 
sex  or  color  in  favor  of  equal  pay  for  equal  work.  A  coun- 
try which  hitches  its  wagon  to  a  world  made  safe  for  democ- 
racy can  ill  afiford  in  any  of  its  industrial  activities  under- 
paid workers,  and  least  of  all  in  any  of  its  public  utilities. 
If  a  Government  Postal  Express  should  be  compelled  to 
devote  all  its  savings  over  the  private  express  system  only 
to  wage  increases  among  the  thousands  of  men  and  women 
express  employees,  instead  of  being  able  to  devote  some  or 
most  of  them  to  lowering  the  rates,  the  inauguration  of  a 
Governmental  Postal  Express  would  be  still  more  than 
justified. 

INADEQUACIES 

Nevertheless,  the  advantages  of  the  present  system  over 
the  old  are  not  sufficient.  A  large  majority  of  the  25,000,000 
persons  served  by  the  rural  postal  delivery  are  still  without 
express  service.  There  is  still  little  opportunity  for  the  direct 
transmission  of  foodstuffs  from  the  producer  to  the  consumer 
which  at  the  present  time  presents  the  most  hopeful  method 
of  attacking  the  soaring  cost  of  food.  There  is  still  much 
potential  and  helpful  express  business  which  has  not  been 
called  into  being,  and  there  is  accordingly  a  considerable 
lowering  in  the  rates  which  has  not  yet  been  eflfected.  There 
is   still   no   possibility  of   coordinating  postal    facilities   with 

39 


express  facilities.  There  is  still  no  change  in  the  method  of 
remunerating  the  railroads,  and  hence  in  the  unscientific 
and  discriminating  methods  of  fixing  rates.  In  a  word,  if  this 
study  may  be  said  to  have  proved  anything,  it  has  proved 
that  the  express  service  belongs  to  the  Post  Office  Depart- 
ment, not  to  the  Railroad  Administration;  indeed,  one  can 
hardly  avoid  the  deduction  that  the  present  v^ar-time  express 
system  could  have  been  adopted  only  from  considerations  of 
either  temporary  political  expediency  or  of  transient  personal 
efficiency;  or  else  of  inattention  to  the  true  nature  of  the 
problem  presented. 

THE  LARGER  ISSUE 

But  material  gains  may  not  be  the  summum  bonum  of  the 
express  busmess.  The  express  service  is  much  more  than  an 
important  business  undertaking,  and  it  is  much  more  even 
than  a  valuable  agent  in  quickening  the  industrial  activities 
of  the  United  States — it  is,  or  rather  it  can  be,  one  of  the 
most  serviceable  media  for  the  development  of  an  American 
culture  as  that  culture  expresses  itself  in  the  economic 
processes  of  the  nation.  The  future  of  the  nation's  express 
service  is  basically  a  problem  of  national  morale.  In  the 
decades  before  April  6,  1917,  there  wsls  no  United  States 
esprit,  no  United  States  national  life,  no  United  States  unity. 
There  v^ere  only  separatist  esprits;  there  v^as  only  class  life; 
there  was  only  geographical  unity.  The  war  found  us  an  un- 
integrated  miscellany,  and  our  Government  a  creature 
strangely  and  even  desirably  aloof  from  the  thoughts  and 
•aspirations  of  our  daily  lives.  And  now,  almost  overnight, 
sacrifice  in  France  and  at  home  has  welded  us  into  one 
people.  Shall  we  remain  one,  or  shall  we  revert  to  factions, 
to  factions  either  at  loggerheads  with  one  another,  or  else 
indifferent  one  to  the  other?  Assuredly  we  shall  soon  re- 
degenerate  into  warring  factions  unless  our  still  largely  in- 
choate strivings  for  national  unity  can  discover  vehicles  to 
carry  them  forward.  A  Government  which  has  become  truly 
a  people's  Government  will  long  continue  in  the  United  States 
only  as  it  draws  unto  itself  and  maintains  both  the  material 
and  the  immaterial  agencies  which  dive  down  to  the  depths  of 
our  national  daily  existence  and  bind  us  together.  More 
powerfully  than  any  other  of  these  forces,  our  vast  public 
utilities  can,  as  an  integral  part  of  the  Government,  retain 
our  Government  as  the  hub  of  our  universe.  And  although 
of  all  the  public  utilities  the  railroads  undoubtedly  present 
the  most  hopeful  source  of  this  re-vitalization  of  our  national 
life,    yet    a    Government    express    service    can    also    help 

40 


in  no  small  degree,  both  in  itself  and  as  a  sharer  in  the 
entire  general  urge  towards  a  democratically-socialized  state, 
to  preserve  and  even  to  invigorate  the  national  morale. 

And  the  future  of  the  express  service  concerns  not  only 
national  morale,  but  also  individual  morale.  Aside  from  a 
few  serviceable  and  hitherto  usually  unappreciated  social  ser- 
vants, whether  in  private  or  in  public  bodies,  success  in 
America  has  lain  along  the  lines  of  private  enterprise  for 
private  gain.  For  the  first  time,  a  widespread  summons  for 
service  to  the  people  has  been  able  during  the  nineteen  months 
of  war  to  supplant  in  the  hearts  of  our  most  capable  adminis- 
trators the  summons  to  exploitation  of  the  people.  For  nine- 
teen months  they  "have  subordinated  self  and  enthroned 
society.  Shall  we  send  them  back  to  the  limbo  of  self- 
aggrandizement  or  shall  we  carve  out  new  paths  for  the 
development  of  character  in  our  American  citizens?  For 
obviously  the  decades  immediately  at  hand  are  to  witness  also 
a  direct  growth  of  the  control  of  the  workers  over  their  indus- 
try, whether  it  be  private  or  public  industry.  Who  can  hope 
to  measure  the  gain  in  individual  morale  when  a  man  realizes 
that  his  own  advancement  depends  upon  the  extent  to  which 
he  can  serve  others,  not  upon  the  extent  to  which  he  can 
serve  himself;  when  such  a  public  utility  as  the  express  com- 
panies is  in  the  hands  of  administrators  who  have  turned 
their  attention  away  from  endeavors  to  derive  as  high  rates 
as  possible  from  the  public  to  endeavors  to  charge  the  public 
as  low  a  rate  as  possible?  If  we  hope  to  keep  unnarrowed, 
and  even  to  broaden,  the  present  fields  in  which  opportunity 
is  given  our  fellow-citizens  to  devote  their  lives  primarily  to 
their  fellows'  service  rather  than  primarily  to  their  own  gain, 
any  national  activity  as  socially-necessary  and  as  nationally- 
significant  as  the  express  companies  must  inevitably  revert 
in  ownership  to  the  nation  to  whose  needs  it  ministers,  and 
the  men  and  women  within  the  machinery  of  its  operation 
must  serve  owners  who  are  not  a  handful  of  individuals,  but 
the  people,  all  the  people  who  make  up  America. 


41 


APPENDIX 

EXPRESS  CONTRACTS 

The  contracts  made  by  express  companies  with  railroads  usually 
provide  that  the  railroad  must: 

1 — Furnish  facilities  for  the  prompt  transportation  of  express  mat- 
ter, accompanied  by  express  messengers,  on  passenger  and  mail  trains ; 
in  baggage  and  combination  cars;  or  on  special  trains  made  up  of 
express  cars  only. 

2 — Turn  over  to  the  express  company,  i.  e.,  give  it  a  monopoly  of, 
all  merchandise  offered  for  transportation  on  passenger  trains,  except 
personal  baggage,  dogs,  corpses,  etc. 

3— Refuse  any  other  express  company  facilities  for  the  transporta- 
tion of  express  matter. 

A — Grant  the  express  company,  wherever  possible,  space  in  rail- 
road stations,  without  charge  where  such  grant  causes  no  extra  expense 
to  the  railroad. 

5 — Grant  free  transportation  to  officers  and  employees  of  the  express 
company,  and  for  its  personal  property  and  supplies. 

6 — Permit  its  employees  at  stations,  etc.,  wherever  possible,  to  be 
agents  also  of  the  express  company. 

On  its  side,  the  express  company  must: 

1— Pay  the  railroad  an  agreed  percentage  (usually  about  50%)  of 
the  charges  levied  and  collected  by  the  express  company  for  its  ser- 
vice of  sending  matter  by  express. 

2— Throw  open  its  books  and  tariffs  to  the  scrutiny  of  the  railroad 
and  furnish  the  railroad  whatever  additional  documents  and  records 
may  be  necessary  to  determine  the  correctness  of  the  sums  assigned 
the  railroad  by  the  express  company. 

3 — Carry  free  of  charge  money  and  other  matter  concerned  with 
the  business  of  the  railroad. 

A — Be  responsible  for  any  damage  to  the  expressed  goods. 

5 — Make  its  charges  at  least  150%  of  the  freight  charge  of  the 
railroads  for  similar  merchandise.  (The  present  charges  average 
about  300%  of  the  freight  charges.) 

6 — Furnish,  heat,  light  and  man  the  cars  necessary  for  the  transpor- 
tation of  express  matter. 


42 


NOTES 

Note  1 — This  estimate  is  based  on  the  following  considerations. 
For  the  fiscal  year  ending  June  30,  1911,  the  official  report  of  the 
Interstate  Commerce  Commission  gives  the  average  charge  per  ship- 
ment of  the  Adams  and  the  United  States  Express  Companies  on 
August  18,  1909,  and  December  22,  1909,  respectively— namely,  $.4962 
and  $.4999,  or  an  average  of  $.4980J^  per  shipment  in  1909.  (Many 
shipments  contain  more  than  one  parcel.)  By  dividing  this  sum  into 
the  known  total  amount  of  money  collected  by  the  express  companies 
for  the  express  services,  we  can  obtain  the  total  number  of  shipments 
for  that  year. 

But  with  the  establishment  of  the  parcel  post  in  1913  the  character 
of  the  express  business  underwent  a  radical  change.  The  fact  that 
the  parcel-post  limits  its  shipments  to  parcels  under  a  certain  weight 
and  under  a  certain  size  is  one  factor  of  the  situation  tending  to 
transfer  to  the  parcel-post  from  the  express  companies  a  larger  num- 
ber of  smaller  packages  than  of  larger  packages,  and  hence  to  make 
the  average  charge  per  package  of  the  express  company  in  1917  higher 
than  in  1909.  A  second  factor  tending  in  the  same  direction  is  the 
fact  that  the  parcel-post  limits  the  amount  of  insurance  which  may 
be  placed  on  a  valuable  package,  while  the  express  company  has  no 
such  limit,  thereby  keeping  with  the  express  company  most  of  the 
valuable  packages  on  which  the  high  insurance  makes  a  high  rate. 
A  third  factor  tending  similarly  is  the  fact  that  for  shorter  distances 
the  parcel-post  rate  is  lower  on  the  whole  than  the  express  rate, 
whereas  for  longer  distances  the  express  rate  is  lower  on  the  whole 
than  the  parcel-post  rate;  and  accordingly  the  express  companies' 
average  haul  was  longer  and  hence  at  a  higher  rate  in  1917  than  in 
1909,  although  not  so  much  longer  as  might  be  expected,  as  has  been 
shown  above.  A  fourth  factor  of  similar  effect  is  the  railroad  con- 
gestion in  1917,  causing  the  expressage  of  many  heavy  shipments 
which  had  formerly  been  dispatched  as  freight,  especially  in  the  latter 
part  of  the  year. 

The  chief  factor  moving  in  the  opposite  direction  is  that  of  the 
reduction  of  16%  in  express  rates  effective  in  1914;  but  there  is  every 
evidence  that  the  effect  of  the  first  four  factors  outweighs  to  a  con- 
siderable extent  the  effect  of  the  last.  So  that  we  should  not  go  far 
wrong  if  we  assume  that  the  average  charge  per  parcel  of  the  express 
companies  in  1917  was  $.80.  This  estimate  is  supported  by  an  investiga- 
tion of  the  Interstate  Commerce  Commission  for  April,  1917,  in  which 
the  average  charge  per  shipment  (often  including  more  than  one 
parcel)  was  found  to  be  $.85. 

By  dividing  $.80  into  the  total  transportation  revenues  of  the  express 
companies  in  1917,  we  get  280,000,000  as  the  number  of  parcels  carried 
by  them  in  that  year. 

The  accuracy  of  this  estimate  of  the  number  of  express  parcels 
may  be  gauged  from  an  investigation  of  the  Interstate  Commerce 
Commission  for  the  number  of  parcels  carried  by  express  companies 
during  the  month  of  April,  1917.  In  that  month,  some  21,100,000 
shipments  were  carried,  from  which  a  total  of  some  250,000,000  ship- 
ments for  the  whole  year  may  be  deduced.  Remembering,  however, 
that  the  freight  congestion  of  last  winter  increased  toward  the  end 
of  the  year  the  normal  acceleration  of  the  number  of  shipments 
dispatched,  and  remembering  also  that  many  shipments  contain  more 
than  one  parcel,  there  would  seem  to  be  little  variation  required  from 
our  first  estimate  of  280,000,000  parcels  carried  by  the  express  com- 
panies in  1917. 

43 


Note  2 — Many,  if  not  most,  shippers,  especially  in  the  smaller 
cities  and  towns,  are  able  to  transport  their  parcels  to  the  parcel-post 
station  without  additional  cost  to  themselves.  The  fee  collected  from 
them  should  therefore  not  cover  also  the  cost  of  collecting  packages 
from  other  shippers.  This  statement  holds  especially  for  the  person 
who  ships  parcels  only  occasionally,  not  primarily  as  a  business  transac- 
tion, and  who  has  little  difficulty  in  taking  or  sending  them  to  the 
dispatching  station.  On  the  other  hand,  without  the  pick-up  feature 
of  the  express  service,  vehicles  would  be  necessary  to  convey  larger 
packages  or  a  great  number  of  smaller  packages  from  other  shippers; 
so  that  this  feature  of  express  service  is  as  necessary  for  certain 
shippers  as  it  is  unnecessary  for  others  and  should  hence  not  be  included 
in  the  charges  levied  on  the  latter.  Again,  in  theory  there  would 
seem  to  be  little  reason  why  the  cost  of  collecting  the  express  fee 
from  the  consignee  on  delivery  should  be  distributed  among  the  express 
fees  on  packages  which  are  prepaid.  This  situation  obtains  in  the 
present  practice  of  the  express  companies,  where  the  one  fee  includes 
all  services  except  those  of  an  especial  nature.  But  in  practice  the 
present  parcel-post  method  of  charging  a  separate  fee  for  collecting 
on  delivery  will  have  to  be  radically  simplified  and  cheapened  if  a 
Government  postal  express  is  to  follow  this  separate  fee  arrangement. 
For  in  1917  less  than  1%  of  the  parcels  sent  by  the  parcel-post  were 
dispatched  C.  O.  D.  The  question  is  one  of  administrative  efficiency, 
and  in  practice  the  present  one-fee-for-normal  services  system  of  the 
express  companies  might  prove  more  desirable  than  the  theoretically 
more  desirable  separate  C.  O.  D.  fee  of  the  present  parcel-post. 

In  other  countries,  practises  in  this  respect  vary.  In  Austria,  Italy, 
Rumania  and  Switzerland,  a  special^  fee  is  charged  for  collecting  on 
delivery.  Belgium  renders  this  service  free  for  packages  upon  which 
the  postage  is  above  ten  cents  and  Denmark,  when  the  weight  of  the 
package  is  above  ten  pounds.  Germany  collects  free  upon  packages 
above  ten  pounds  and  renders  the  service  at  a  fee  upon  packages 
under  that  amount. 

Note  3 — The  possibility  of  economy  in  a  postal  express  as  contrasted 
with  the  express  companies  may  be  readily  understood  by  a  glance 
at  the  following  table  of  the  equipment  required  and  utilized  in  1917 
by  the  express  companies  of  the  United  States : 

Cars 256 

Horses 19,986 

Automobiles 2,886 

Wagons 14,907 

Sleighs   and   Buggies 3,563 

Trucks 56,924 

In  1917  there  were  about  1,800  railway  postal  cars  in  operation. 
These  are  furnished  the  Post  Office  Department  by  the  railroads. 
As  has  been  said,  other  corresponding  equipment  used  by  the  Post 
Office  Department  is  usually  owned  by  private  contractors  who  fur- 
nish transportation  by  wagon  and  by  automobiles  on  contract,  so  that 
it  is  impossible  to  get  accurate  figures  concerning  it.  Some  idea  of 
the  equipment  needed,  however,  may  be  gleaned  from,  the  postal 
operations  within  the  cities  of  Chicago,  Pittsburgh,  Philadelphia,  De- 
troit, Washington,  St.  Louis,  Indianapolis  and  Nashville.  In  these 
cities  all  the  transportation  of  mail  between  the  railroad  stations  and 
the  post  offices  as  well  as  in  the  collection  and  delivery  services  is 
performed  by  automobiles  owned  by  the  Post  Office  Department  itself. 
The  number  of  automobiles   required   for  the   service   in  these  cities 

44 


and  operated  in  them  in  1917  was  541.  This  method  of  conveying 
postal  matter  within  the  cities  mentioned  represents  a  departure  from 
the  contract  system  which  the  Postmaster-General  asserts  should  be 
and  will  be  extended.  Accordingly,  more  and  more  the  economies 
under  this  head  in  consoHdating  the  express  service  in  the  Postal 
System  would  accrue  to  the  Post  Office  Department  directly  rather 
than  indirectly. 

Note  A — The  example  of  the  United  Kingdom  substantiates  the  last 
surmise.  For  in  the  United  Kingdom  the  railroads,  all  privately 
owned,  are  given  55%  of  the  total  charges  on  all  parcel-post  parcels 
carried  by  them,  irrespective  of  distance.  (And  there  is  evidence  that 
this  remuneration  is  expressly  considered  too  generous  in  the  United 
Kingdom.)  Now,  the  parcel-post  charges  in  the  United  Kingdom  are 
considerably  lower  than  the  express  charges  in  the  United  States 
not  only  absolutely,  but  also  relatively  to  the  different  values  of  money 
in  the  two  countries.  But  the  railroads'  service  in  carrying  a  parcel- 
post  package,  aside  from  furnishing  mail  cars,  is  no  more  expensive 
than  their  service  of  carrying  an  express  package  of  the  same  weight. 
If  the  railroads  of  the  United  States  were  to  carry  parcels  at  55% 
of  the  parcel-post  charges  or  at  that  percentage  of  the  parcel-post 
charges  in  this  country  which,  considering  the  difference  of  conditions 
in  the  two  countries,  would  correspond  to  55%  of  the  parcel-post 
charges  in  the  United  States,  they  obviously  would  be  receiving  much 
less  than  50%  of  the  total  express  charges.  Nor  should  the  fact  that 
express  packages  on  the  whole  may  travel  farther  and  w'eigh  more 
than  parcel-post  packages  invalidate  the  argument,  for  the  present 
contracts  with  the  railroads  have  not  been  altered  to  any  extent  so 
as  to  meet  any  such  condition  due  to  the  advent  of  the  parcel-post — 
in  the  year  before  the  parcel-post  was  established  the  railroads  got 
49%  of  the  net  express  charges  and  in  1917,  51%.  So  that  the  ques- 
tion as  to  whether  the  railroads  of  the  United  States  obtain  on  the 
whole  too  high  a  proportion  of  the  express  rates  because  of  unduly 
high  percentage  clauses  in  the  express  company-railroad  company  con- 
tracts is,  if  not  thus  answered,  at  least  illumined. 


45 


BIBLIOGRAPHY 

ADAMS  EXPRESS  COMPANY,  et  al— Response  in  Interstate  Com- 
merce Commission  Docket  No.  4198,  opposing  decrease  in  express 
rates  (1911). 

CENSUS  BUREAU— 
Census  of  1890 :    Transportation  in  the  United  States. 
Census  of   1890,   Bulletin:     Transportation  Business  in  the  United 

States  (Part  II),  Transportation  by  Express  Companies  (1894). 
Express  business  in  the  United  States  (1907). 

CHANDLER,  WILLIAM  H.— The  Express  Service  and  Rates  (1914). 

CONGRESSIONAL  RECORD,  1911  AND  1912— Speeches,  bills,  etc., 
concerning  the  parcel-post  and  express  service. 

DEPARTMENT  OF  AGRICULTURE—  -'i^^ 

Annual  Reports,  Secretary  of  Agriculture,  1917  and  1918.  ^"iiP 

Farmers'  Bulletins  Nos.  594,  688,  703,  922,  930  and  others  relating 
to  marketing  by  parcel-post. 

FIELD,  ARTHUR  S.— Rates  and  Practises  of  Express  Companies; 
and  The  Express  Charges  Prescribed  by  the  Interstate  Commerce 
Commission,  American  Economic  Review,  1913,  volume  3,  pages  314 
and  831. 

INTERSTATE  COMMERCE  COMMISSION— 
Annual  Reports,  Statistics  of  Express  Companies,  1909-1918. 
Bulletin    13 :     Interpretations    of    Accounting    Classifications  ...  in 

accordance  with  .  .  .  the  Act  to  Regulate  Commerce  (1917). 
Classification  of  Expenditures  for  Real  Property  and  Equipment  of 

Express  Companies   (1908). 
Classification   of   Operating  Revenues   of   Express   Companies,   etc. 

(1912). 
Dockets  No.  4198,  1280,   1911,  1916,  2175,  2176,  2246,  4302.     (In  re 
Express  Rates,  Practises,  Accounts  and  Revenues.)     1912, 

Brief  on  Behalf  of  Shippers    (Fairchild).     See  also  Adams  Ex- 
press Company,  above. 

Report  No.  1498:  Hearing  and  Supplemental  Order  No.  15  (1915). 
Docket  No.  9972  (Proposed  Increase  in  Express  Rates).  June,  1918. 
Equity  No.  4198    (In   re   Express   Rates,   Practises,   Accounts   and 

Revenues)  :    Released  rates  (1917). 
Ex  parte  64:     In  re  Increase  in  Express  Rates  (October,  1918). 
Uniform   System   of   Accounts  ...  in   accordance   with  .  .  .  Act  to 

Regulate  Commerce    (1914). 

JOHNSON,  E.  R.,  and  HUEBNER,  G.  G.— Railroad  Traffic  and 
Rates,  Volume  II  (1911). 

KIRKMAN,  M.  M. — The  Science  of  Railways:  Baggage,  Express  and 
Mail  Business  (1896). 

LEWIS,  DAVID  J.— 
A  Bill  to  Take  Over  the  Express  Companies  of  the  United  States 

(1911). 
A  Brief  for  a  General  Parcel  Post  (1913). 
Postal  Express  as  a  Solution  of  the  Parcel   Post  and  High  Cost 

of  Living  Problems   (1912). 
Study  in  Some  Proposed  Improvements  to  the  Parcel-Post  (1915). 

46 


POST  OFFICE  DEPARTMENT— 
Annual  Reports,  Postmaster  General. 

Comparative   Statements    (Blue   Prints)    on   Operations   of   Parcel- 
Post. 

PRESIDENT  OF  THE  UNITED  STATES— A  Proclamation  (No. 
1497)  Taking  Possession  and  Control  of  the  American  Railway  Ex- 
press Company   (November  16,  1918). 

STIMSON,  A.  L.— 
History  of  the  Express  Companies   (1858). 
History  of  the  Express  Business  (1881). 

THOMPSON,  SLASON— Postal  Express  vs.  Parcel-Post,  A  Review 
of  Congressman  David  J.  Lewis's  Bill  Proposing  that  the  Govern- 
ment Take  Over  the  Express  Business  (1911). 

TUCKER,  T.  W.— Waifs  from  the  Way-bills  of  an  Old  Expressman 
(1872). 

UNITED  STATES  OFFICIAL  BULLETIN,  October  31,  1918— State- 
ment of  Contract  between  the  Railroad  Administration  and  the 
Express  Companies  concerning  the  American  Railway  Express  Com- 
pany. 

UNITED   STATES  SENATE  COMMITTEE  ON   POST  OFFICE 

AND  POST  ROADS— 
Hearings  before  Sub-Committee  on  Parcel-Post,  November  7,  1911- 

January  16,  1912. 
Parcel  Post  in  Foreign  Countries  (1912). 
Table  Showing  Data  concerning  Parcel-Post  Systems  of  .  .  .  World 

(1912). 

WELLS,  HENRY— Sketch  of  the  Rise,  Progress  and  Present  Condi- 
tion of  the  Express  System  (1864). 


L 


47 


THE  INTERCOLLEGIATE  SOCIALIST  SOCIETY 

The  Intercollegiate  Socialist  Society  was  formed  in  1905 
for  the  purpose  of  promoting  an  intelligent  interest  in  Social- 
ism among  collegians  and  educated  men  and  women  generally. 
It  is  an  educational,  not  a  political  propagandist  organization. 
It  has  no  creed,  exacts  no  pledges  and  welcomes  to  its  ranks  all 
who  are  genuinely  desirous  of  securing  more  light  on  Socialism 
and  allied  subjects. 

The  regular  dues  of  the  Society  are  $2.00  a  year;  dues  of 
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Collegians  are  eligible  for  regular  membership.  Non-collegians 
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Society.  Every  member  receives  the  Society's  magazine  and 
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and  is  welcome  to  all  meetings  of  the  Society  and  of  its  local 
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IN  THE  I.  S.  S.  BOOK  STORE 

I.  S.  S.  Magazine $  .15 

Book  List  on  Socialism  and  Allied  Subjects .05 

Study  Course  in  Socialism.    Laidler .05 

The  Express  Companies  of  the  United  States.    Benedict 1.10 

Public  Ownership  Throughout  the  World.    Laidler .10 

Facts  of  Socialism.    Hughan .25 

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Cooperation  in  the  United  States.     Perky .10 

Congressional  Platform.  U.  S.  Socialist  Party.  1918 .05 

Socialism,  Utopian  and  Scientific.    Engels .10 

Communist  Manifesto.    Marx  and  Engels .10 

Who  Gets  America's  Wealth?    Walling .10 

The  Great  Lesson  of  War.     Schoonmaker .05 

The  Socialism  of  Today.  Walling,  Hughan,  Stokes  and  Laidler  1.75 

State  Socialism — Pro  and  Con.   Walling  and  Laidler 2.00 

The  Bolsheviks  and  the  Soviets.   Williams .10 

Songs  for  Socialists .10 

The  Socialist  Argument.    Hitchcock .25 


ii« 


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